House Hearing, 112TH Congress - Health Care: Challenges Facing Pennsylvania's Workers and Job Creators

HEALTH CARE: CHALLENGES FACING
PENNSYLVANIAS WORKERS AND JOB CREATORS
FIELD HEARING
BEFORE THE
SUBCOMMITTEE ON HEALTH,
EMPLOYMENT, LABOR AND PENSIONS
COMMITTEE ON EDUCATION
AND THE WORKFORCE
U.S. HOUSE
OF
REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS

SECOND SESSION
HEARING HELD IN BUTLER, PA, FEBRUARY 22, 2012
Serial No. 11253

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COMMITTEE ON EDUCATION AND THE WORKFORCE

JOHN KLINE, Minnesota, Chairman
Thomas E. Petri, Wisconsin
Howard P. Buck McKeon, California
Judy Biggert, Illinois
Todd Russell Platts, Pennsylvania
Joe Wilson, South Carolina
Virginia Foxx, North Carolina
Bob Goodlatte, Virginia
Duncan Hunter, California
David P. Roe, Tennessee
Glenn Thompson, Pennsylvania
Tim Walberg, Michigan
Scott DesJarlais, Tennessee
Richard L. Hanna, New York
Todd Rokita, Indiana
Larry Bucshon, Indiana
Trey Gowdy, South Carolina
Lou Barletta, Pennsylvania
Kristi L. Noem, South Dakota
Martha Roby, Alabama
Joseph J. Heck, Nevada
Dennis A. Ross, Florida
Mike Kelly, Pennsylvania
George Miller, California,

Senior Democratic Member
Dale E. Kildee, Michigan
Donald M. Payne, New Jersey
Robert E. Andrews, New Jersey
Robert C. Bobby Scott, Virginia
Lynn C. Woolsey, California
Ruben Hinojosa, Texas
Carolyn McCarthy, New York
John F. Tierney, Massachusetts
Dennis J. Kucinich, Ohio
Rush D. Holt, New Jersey
Susan A. Davis, California
Raul M. Grijalva, Arizona
Timothy H. Bishop, New York
David Loebsack, Iowa
Mazie K. Hirono, Hawaii
Jason Altmire, Pennsylvania
Barrett Karr, Staff Director

Jody Calemine, Minority Staff Director
SUBCOMMITTEE ON HEALTH, EMPLOYMENT, LABOR AND PENSIONS

DAVID P. ROE, Tennessee, Chairman
Joe Wilson, South Carolina
Glenn Thompson, Pennsylvania
Tim Walberg, Michigan
Scott DesJarlais, Tennessee
Richard L. Hanna, New York
Todd Rokita, Indiana
Larry Bucshon, Indiana
Lou Barletta, Pennsylvania
Kristi L. Noem, South Dakota
Martha Roby, Alabama
Joseph J. Heck, Nevada
Dennis A. Ross, Florida
Robert E. Andrews, New Jersey

Ranking Member
Dennis J. Kucinich, Ohio
David Loebsack, Iowa
Dale E. Kildee, Michigan
Ruben Hinojosa, Texas
Carolyn McCarthy, New York
John F. Tierney, Massachusetts
Rush D. Holt, New Jersey
Robert C. Bobby Scott, Virginia
Jason Altmire, Pennsylvania
(II)
C O N T E N T S
Page
Hearing held on February 22, 2012 .......................................................................

Statement of Members:
Andrews, Hon. Robert E., ranking member, Subcommittee on Health,
Employment, Labor and Pensions, prepared statement of ........................
Kelly, Hon. Mike, a Representative in Congress from the State of Pennsylvania ..........................................................................................................
Prepared statement of ...............................................................................
Roe, Hon. Phil, Chairman, Subcommittee on Health, Employment, Labor
and Pensions .................................................................................................
Statement of Witnesses:
Bishop, Kathleen, IOM, president/CEO, Meadville-Western Crawford
County Chamber of Commerce ....................................................................
Joint, Lori, director of government affairs, Manufacturer & Business
Association .....................................................................................................
Kanterman, Patti-Ann, chief financial officer, Associated Ceramics &
Technology, Inc. ............................................................................................
Knecht, Will, president, Wendell August Forge .............................................
Koehler, Georgann, retired SEIU member, psychiatric aide ........................
Nelson, Paul T., owner and CEO, Waldameer Park, Inc. .............................
Vitt, Ralph, owner, Vitt Insure .......................................................................
White, Hon. Donald C., senator, State of Pennsylvania; chairman, Committee on Banking and Insurance ...............................................................
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HEALTH CARE: CHALLENGES

FACING PENNSYLVANIAS WORKERS
AND JOB CREATORS
Wednesday, February 22, 2012
U.S. House of Representatives
Subcommittee on Health, Employment, Labor and Pensions
Committee on Education and the Workforce
Washington, DC
The subcommittee met, pursuant to call, at 1:00 p.m., Butler

Township Administration Building, 290 S. Duffy Road, Butler,
Pennsylvania, Hon. Phil Roe [chairman of the subcommittee] presiding.
Present: Representatives Roe and Kelly.
Staff Present: Casey Buboltz, Coalitions and Member Services
Coordinator; Benjamin Hoog, Legislative Assistant; Brian Newell,
Deputy Communications Director; Todd Spangler, Senior Health
Policy Advisor; Daniel Brown, Minority Policy Associate.
Chairman ROE. A quorum being present, the subcommittee on
Health, Employment, Labor and Pensions will come to order.
Good afternoon, everyone. First I want to thank the people of
Butler, Pennsylvania for hosting todays hearing on the Health,
Employment, Labor and Pensions Subcommittee. Thank you all
sincerely for being here.
Second, allow me to extend our appreciation to the witnesses for
being with us today. We are grateful for the opportunity to hear
your thoughts and personal experiences on the very important
issues of healthcare and job creation.
Over four years ago, our nation fell into the worst recession since
the Great Depression. Businesses closed. Jobs were lost. Savings
disappeared. And countless lives were transformed in the pain of
the economic downturn. While weve had some modest progress in
recent months, we still have a long way to go before we reach the
height of prosperity our families, employers and workers once enjoyed.
Recently the Gallop Polling Company talked to a number of
small business owners who said they werent looking to hire any
workers. And Gallop asked why. The vast majority expressed concerns about the state of the economy and poor sales. However, 46
percent of small business owners cited fear of government regulations, and 48 percent pointed to rising healthcare costs.
As a policymaker, these responses by our nations leading job creators are startling, yet not unexpected. For too long some in Wash(1)
2
ington have viewed our economic crises as the political means to
advance an agenda that ignores real challenges facing our nation.
This disturbing trend over the last several years has destroyed virtually any sense of certainty in the economy, making it more difficult for businesses to grow and create jobs.
Perhaps the greatest example of this misguided agenda was the
healthcare reform legislation signed into law in 2010. At a time
when millions of Americans were looking for work and taxpayers
were swimming in government debt, Democrats in Washington
were advancing a multi-trillion dollar government takeover of
healthcare. A lot of lofty promises were made in an attempt to win
public support, yet the reality of such new healthcare law is one
of broken promises.
We were told it would help lower healthcare costs. President
Obama pledged in his plan to decrease insurance premiums by
$2,500 for the average family. Not true. The Kaiser Family Foundation reports that the average family health plan now costs more
than $15,000 thanks to a nine percent increase in costs just last
year.
We were told if you like your current healthcare plan, you can
keep it. Not true. The Presidents decision to force private employers including religious organizations to offer services that may violate their moral beliefs demonstrates that Washington is in control,
and significant changes to our healthcare are inevitable.
Finally, we were told that the law will create millions of jobs.
Again, not true. At the center of the Affordable Care Act are jobcrushing mandates and regulations. Employers with more than 50
workers are now forced to provide expensive and government-approved health insurance. If they cant afford to, they face a fine of
$2,000 per worker except for the first 30 workers.
Weve heard many employerswe will hear more todaydescribe the difficult choices they now face, choices between providing
government-approved healthcare and cutting hours or laying off
workers. It is clear the healthcare law is failing to adjust to the
challenges facing our country. In fact, in many ways, its making
things worse.
Im committed to repealing this government takeover of
healthcare. Pursuing the right reforms and lower costs to workers
will not undermine the success of employers. I know its a commitment shared by Representative Kelly and many of our colleagues
across the country as well. The questions we will ask today are:
What types of responsible reforms will help reign in the cost of
healthcare? How can we turn recent gains weve seen into longterm economic growth? And what do the people of Pennsylvania see
as the challenges facing their state and country and where do they
believe the road to prosperity lies?
I look forward to our discussion. Before I kick it over to Mike
Kelly, let me just tell you who I am a little bit. I grew up in middle
Tennessee on a small farm. The first home I lived in didnt have
indoor plumbing or running water. The school I went to the first
year of my life didnt have indoor plumbing or running water.
My dad was a union member. He worked for B.F. Goodrich making shoe heels in a factory and never made $10,000 a year in his
life until he died. My mother was a bank teller. I went to college
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at Austin Peay, a small college in my hometown, worked my way
through college, worked in medical school, served in the 2nd United
States Infantry Division, took a small family to east Tennessee just
to go work as a doctor and raise my family.
Ive had the privilege of working in the medical school in Johnson
City, Tennessee and growing our practice from four doctors to 87
and 350 employees. And the problem in America today isand this
is something that absolutelywhen I got to Congress three years
ago, I worked for 31 years practicing medicine. Im an OB doctor.
Ive delivered almost 5,000 babies. Let me tell you it worked out
pretty well making deliveries on the voters. I can tell you that.
[Laughter.]
Chairman ROE. But I saw the cost of what was hurting America,
being denied to my patients. The American healthcare system is
the greatest in the world, but it cost too much money to go to the
doctor.
Number two, we have a segment of our population that cant afford health insurance coverage. Ive seen those patients in Appalachia where I live.
And, third, we have a liability crisis in America. Were going to
be here today to discuss those things and listen to all sides of this.
Im really looking forward to this. This is not the first time Ive
done this.
We have been in Evansville, Indiana, really around the country.
Im a doctor thats been in Congress for three years. Im not a career politician. Neither is Mike Kelly.
Now, without objection, Ill recognize Representative Kelly, a
strong advocate on behalf of Pennsylvanias families and job creators.
[The statement of Dr. Roe follows:]
Prepared Statement of Hon. Phil Roe, Chairman, Subcommittee on
Health, Employment, Labor and Pensions
Good morning, everyone. First, I want to thank the people of Butler, Pennsylvania
for hosting todays hearing of the Health, Employment, Labor, and Pensions Subcommittee. Second, allow me to extend our appreciation to the witnesses for being
with us today. We are grateful for the opportunity to hear your thoughts and personal experiences on the very important issues of health care and job creation.
Over four years ago, our nation fell into the worst recession since the Great Depression. Businesses closed, jobs were lost, savings disappeared, and countless lives
were transformed by the pain of a deep economic downturn. While weve made some
modest progress in recent months, we still have a long way to go before we reach
the height of prosperity our families, employers, and workers once enjoyed.
Recently, the Gallup polling company talked to a number of small business owners who said they werent looking to hire new workers right now. Gallup asked:
Why? The vast majority expressed concerns about the state of the economy and poor
sales. However, 46 percent of small business owners cited fear of government regulations and 48 percent pointed to rising health care costs.
As a policymaker, these responses by our nations leading job creators are startling yet not unexpected. For too long, some in Washington viewed our economic crisis as the political means to advance an agenda that ignores the real challenges facing the nation. This disturbing trend of the last several years has destroyed virtually any sense of certainty in the economy, making it more difficult for businesses
to grow and create jobs.
Perhaps the greatest example of this misguided agenda was the health care reform legislation signed into law in 2010. At a time when millions of Americans were
looking for work and taxpayers were swimming in government debt, Democrats in
Washington were advancing a multi-trillion dollar government takeover of health
care.
4
A lot of lofty promises were made in an attempt to win public support, yet the
reality of the new health care law is one of broken promises. We were told it would
help lower health care costs. President Obama pledged that his plan would decrease
insurance premiums by $2,500 for the average family. Not true. The Kaiser Family
Foundation reports that the average family health plan now costs more than
$15,000thanks to a nine percent increase in cost just last year.
We were told if you like your current health care plan, you can keep it. Not true.
The presidents decision to force private employersincluding religious organizationsto offer services that may violate their moral beliefs, demonstrates that
Washington is in control and significant changes to our health care are inevitable.
Finally, we were told the law would create millions of new jobs. Again, not true.
At the center of ObamaCare are job crushing mandates and regulations. Employers
with more than 50 workers are now forced to provide expensive and governmentapproved health insurance. If they cant afford to, they face a fine of $2,000 per
worker (except for the first 30 workers). Weve heard many employers, and we will
hear more today, describe the difficult choices they now face, choices between providing government-approved health care and cutting hours or laying off workers.
It is clear the health care law is failing to address the challenges facing our country. In fact, in many ways, it is making things worse. I am committed to repealing
this government takeover of health care and pursuing the right reforms that will
lower costs for workers while not undermining the success of employers. I know that
is a commitment shared by Representative Kelly, and many of our colleagues across
the country as well.
The questions we will ask today are: What types of responsible reforms will help
rein in the costs of health care? How can we turn the recent gains weve seen into
long-term economic growth? What do the people of Pennsylvania see as the challenges facing their state and country, and where do they believe the road to prosperity lies? I look forward to our discussion.
Without objection, I will now recognize Representative Kelly, a strong advocate
on behalf of Pennsylvanias families and job creators, for any opening remarks he
wishes to make.
Mr. KELLY. Thank you, Doctor. I appreciate that. Todays hearing

is timely and important. I think its critical for members of Congress to get outside the Beltway and hear from the men and
women whose lives are affected by policies advanced in our nations
capital.
The recent recession ended almost three years ago, yet we continue to struggle through a very difficult time in a sluggish economy. Our state needs jobs.
Weve been fortunate to experience modest progress recently as
more Pennsylvanians are working today than a year ago; however,
this progress still does not make up for the devastation caused by
the economic downturn. We must make sure federal policies continue the gain and are not permitted to undermine the growth
weve seen here in Pennsylvania and across our nation.
Im grateful for the opportunity today to come here and listen to
the people in the room. As the doctor and I tell you, we are not
professional politicians. You know my background. Im from Butler.
I sold cars here for almost 60 years. I understand how tough it is.
I understand what you go through and the uncertainties you face
right now.
So we want to come here to Western Pennsylvania and hear
what Western Pennsylvania had to say, not Washington telling you
what Washington needs to say, but what do you need to say? What
do we need to hear, and what do we need to take back?
Employer provided health insurance is critical to the healthcare
needs of many Pennsylvania families. Roughly 54 percent of Pennsylvanians receive insurance through an employer, slightly more
than the national average.
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As a business owner, I, like so employers, am keenly aware that
shifts in healthcare policies can have a dramatic impact on my
business. The costs associated with health insurance can often determine whether an employer is able to raise wages or even hire
new workers.
You noted, Mr. Chairman, a recent Gallop poll survey of small
businesses currently not looking to add new workers. It is deeply
troubling that one out of every two small business owners may not
be able to hire due to concerns of rising healthcare costs. The regulations, government regulations continue, continue to drive their
cost of operation up.
This kind of fear and uncertainty among the countrys top job
creators poses a clear threat to economic recovery and future job
creation. I know some prefer to focus on a few provisions in the law
that continue to receive bipartisan support, such as providing coverage to individuals with preexisting conditions. However, this debate never been about whether to help those who need help. The
choice has never been between doing nothing and supporting a government takeover of healthcare.
It has and continues to be about the degree to which we allow
the federal government to dictate some of the most personal decisions in our lives.
The recent regulatory action taken by the President to force private employers to offer health services they find morally objectionable demonstrates that Washington has gone much too far. Now,
we can act smart and sponsor reforms at lower costs and expand
access to care without putting the federal government in charge of
one-sixth of our nations economy.
Those who happen to believe that change is only possible through
more government control and more government spending do a nation a great disservice. We have a responsibility to actually chart
a different course. Our witnesses today are going to help us do just
that. Rest assured we will bring your thoughts back to Washington,
D.C.
Well use them to persuade some of our reluctant colleagues that
its time to repeal the law. Get government out of the way. Get
them out of the hair of our job creators and work towards common
sense solutions that we know work every day in our regular lives
to help expand access to affordable healthcare for all American people.
Doctor, I go back to you.
[The statement of Mr. Kelly follows:]
Prepared Statement of Hon. Mike Kelly, a Representative in
Congress From the State of Pennsylvania
Todays hearing is a timely and important event. I think it is critical for members
of Congress to get outside the Beltway and hear from the men and women whose
lives are affected by the policies advanced in the nations capitol.
The recent recession ended almost three years ago, yet we continue to struggle
with a difficult and sluggish economy. Our state needs jobs. Weve been fortunate
to experience modest progress recently as more Pennsylvanians are working today
than a year ago. However, this progress still does not make up for the devastation
caused by the economic downturn. We must make sure federal policies support continued gains, and are not permitted to undermine the growth weve seen here in
Pennsylvania and across the nation.
I am grateful for the opportunity today to listen to folks in this room describe the
challenges facing families in the Keystone state, and learn what you see coming in
6
the horizon. Regrettably, I dont have to tell you that numerous new mandates and
regulations will soon threaten our workplaces, thanks to the health care law many
of us have dubbed ObamaCare.
Employer-provided health insurance is critical to the health care needs of many
Pennsylvania families. Roughly 54 percent of Pennsylvanians receive insurance
through an employer, slightly more than the national average. As a business owner,
I, like so many employers, am keenly aware that shifts in health care policies can
have a dramatic impact on my business. The costs associated with health insurance
can often determine whether an employer is able to raise wages or hire new workers.
You noted, Mr. Chairman, a recent Gallup survey of small businesses currently
not looking to add new workers. It is deeply troubling that one out of every two
small business owners may not be hiring due to concerns of rising health care costs
and government regulations. This kind of fear and uncertainty among the countrys
top job creators poses a clear threat to our economic recovery and future job creation.
I know some prefer to focus on a few provisions in the law that continue to receive
bipartisan support, such as providing coverage to individuals with pre-existing conditions. However, this debate has never been about whether we help those who need
help. The choice has never been between doing nothing and supporting a government takeover of health care.
It has and continues to be about the degree to which we allow the federal government to dictate some of the most personal decisions in our lives. The recent regulatory action taken by the president that will force private employers to offer health
services they find morally objectionable demonstrates Washington has gone too far.
We can enact smart, responsible reforms that will lower costs and expand access
to care without putting the federal government in charge of one-sixth of our nations
economy. Those who would have us believe that change is only possible through
more government control and spending do the nation a great disservice.
We have a responsibility to chart a different course and our witnesses today will
help us to do just that. Rest assured, we will bring your thoughts to Washington,
D.C. and use them to persuade our reluctant colleagues that it is time to repeal
ObamaCare, get government out of the way of our job creators, and work toward
commonsense solutions that help expand access to affordable health care for the
American people.
Chairman ROE. Pursuant to Rule 7(c), all members will be permitted to submit written statements to be included in the permanent hearing record. Without objection, the hearing record will remain open for 14 to allow such statements and other extraneous
material referenced during the hearing to be submitted to the official hearing record.
Now, Mr. Kelly, would you introduce our witnesses.
Mr. KELLY. Thank you, Mr. Chairman.
First of all, on panel onewe have two panels todaywe have
Honorable Don White. Senator White is a State Senator serving
the people of Pennsylvanias 41st District since 2001. Before entering public service, Senator White was an insurance broker. So he
knows very much what it is were talking about today.
Ms. Kathleen Bishop is also with us. She is the President and
CEO of the Meadville-Western Crawford County Chamber of Commerce in Meadville, Pennsylvania. Ms. Bishop specializes in the
areas of economic, social, educational and political progress for the
Meadville area.
Also Ms. Georgann Koehler is a retired SEIU member and psychiatric aide. She is from Pittsburgh, Pennsylvania.
Ms. Koehler, thank you for being here.
Ms. Lori Joint is here. She is the director of government affairs
for the Manufacturing and Business Association in Erie, Pennsylvania, a manufacturing and business partnered with more than
4,500 businesses in Pennsylvania, New York and Ohio, providing
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employee benefit services, government representation and employee training programs. Ms. Joint holds a degree in political
science from Gannon University.
Lori, thank you for being here today. Mr. Chairman.
Chairman ROE. Before we start today, we live in a free nation.
Ive had the privilege of being in Afghanistan with our troops in
the last 90 days, and I would like, if you would, to stand and lets
first have you introduce Mr. Nelson.
Mr. KELLY. Thank you very much. We have with us todayone
of our witnesses is Mr. Paul Nelson. And there are a lot of Veterans with us today. So if we could, all those Veterans who are in
the room, please stand so we can recognize you and thank you for
the great service you provide to our country. [Applause.]
Chairman ROE. If everybody will rise, we will start.
[Pledge of Allegiance.]
Chairman ROE. Before I recognize you to provide your testimony,
let me briefly explain our light system. You have five minutes to
present your testimony. When you begin, the light in front of you
will turn green, and when one minute is left, the light will turn
yellow. When your time has expired, the light will turn red, at
which point Ill ask you to wrap up your remarks as best youre
able. I wont interrupt you, but please be mindful of the lighting
system. Id appreciate it if you will.
After you have testified, members will each have five minutes for
questions. And we will start now with the Honorable Mr. Don
White.
Thank you for being here, Mr. White.
STATEMENT OF HON. DON WHITE, SENATOR PA41,
PENNSYLVANIA STATE SENATE
Mr. WHITE. Thank you very much. Its very uplifting to have my
local congressman, who is also a longtime small businessman, and
have somebody from the medical profession down in D.C., especially on an issue like this. Its gratifying. I appreciate your service.
I want to thank you for the opportunity to discuss the impact of
the Federal Patient Protection and Affordable Care Act on the individual states employers, particularly those doing business here in
our Commonwealth of Pennsylvania. As chairman of the Pennsylvania State Senate Committee on Banking and Insurance, Ive had
a front row seat on the development of state action in the Commonwealth of Pennsylvania to comply with this law, and I have discussed this matter at length with my colleagues, business leaders,
hospitals, healthcare providers and consumers.
To begin with, I want to make it clear that Pennsylvania is taking the initial steps to comply with this federal mandate by January 1, 2013. The last thing anyone in Pennsylvania wants is for the
federal government to take this over and issue edicts over the people of our state. Im sure that feeling is echoed by my peers in most
other states. Yes, the Patient Protection and Affordable Care Act
is yet another mandate on states, businesses, individuals and families.
We recognize the legislation may have passed along with the best
of intentions, but lets be clear that its a mandate being passed
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along with little guidance, no funding for states or for the businesses that will be impacted by these requirements.
At this point, as the time for compliance continues to elapse, let
me make it clear there is a tremendous amount of anxiety and
trepidation at the state level among the business community. Yes,
we are moving forward in implementation. But this progress is
tempered by the sense of pragmatic caution. No one is comfortable
with taking an aggressive approach in implementation.
Weve had little or no guidance in this matter, nor do we have
a model to work from. Its true that Massachusetts and Utah have
developed systems similar to what is being mandated by the Federal Patient Protection and Affordable Care Act. But those systems
are vastly different in structure, and I dont believe that either
would serve as an appropriate model for the people of Pennsylvania.
With legislation pending in the U.S. Supreme Court and with the
Presidential election set for November of this year, there is a lack
of confidence that the federal Patient Protection and Affordable
Care Act will stand unscathed and remain unchanged when all is
said and done. The actions we take now may end up being superfluous and even contrary to the ultimate compliance if this measure or any part of it ultimately becomes effective.
This uncertainty has a detrimental effect on Pennsylvanias economy, business growth and job creation in Pennsylvania. At this
point, no one is even certain what must be covered under the Act.
The states and employers see a requirement for essential health
benefits. But no one knows what is going to fall under the parameters of essential benefit.
Granted, the federal Department of Health and Human Services
is currently providing some latitude in states in this area, but it
remains an area of contention and likely a fertile ground for litigation. The controversy surrounding mandated contraceptive coverage is a prime example of the controversy that will surround this
provision, and it certainly will not be the only area of contention.
As Ive seen on numerous occasions at the state level and particularly in insurance coverage as monitored by the Committee on
Banking and Insurance, the broad questions of whats in and
whats out and the various nuances therein are rife for dispute and
contention.
As additional essential benefits are added, the cost that must be
borne by government and employers will increase as well. We still
need answers to some important actuarial value and cost sharing
questions that will determine whether the package is affordable.
Looking down the road, the confident of this mandate on the
states are already set to increase because of the Medicaid expansion as was clearly described in Forbes magazine on January 27,
2012, and I quote, The healthcare reform law passed in March
2010 provides for substantial expansion of the must cover population, essentially anyone from a family with income below 138 percent of the federal poverty line, an amount that varies based on
family size, this is a major component of the healthcare reform law.
According to the Congressional Budget Office, half of the uninsured, who they project to become covered as a result of the new
law, will obtain coverage because of the Medicaid expansion.
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From the states point of view, the problem is how will they
come up with the money to cover their share of the cost of
healthcare for these additional people. The health reform law provides a partial answer. The federal government will pay for the entire cost of coverage for those who are newly eligible but only for
the first three years, from 2014 to 2016. The federal government
will reduce its contribution to 95 percent in 2017, dropping to 90
percent in 2020 and thereafter.
For states to pay ten percent of the cost may not seem like
much, though it might turn out to be quite a substantial sum of
money given the large numbers of people involved. The fact is that
most states budgets are already strained, and Medicaid spending
is already one of the largest items in every state budget.
I strongly concur with the authors opinion. In fact, one of the
key cost drivers in the proposed 2012 state budget just unveiled by
Governor Corbett on February 7 were mandated increases of more
than $800 million to the Department of Public Welfare. The Governor responded to those mandates proposing a shift of expenditures within the department which ultimately could result in increased cost for counties and/or reduction in human services available for the citizens. An increase in state Medicaid cost, even if
only ten percent of the expansion, will surely have an adverse impact on Pennsylvanias state budget and will lead to further reductions in support for other key services and programs and a broadbased tax increase on employers and/or individuals.
In particular, small business owners are going to be crushed by
the federal Patient Protection and Affordable Care Act. I live in a
small borough of Indiana, Pennsylvania. We have a fair sized university surrounded by quite a few small businesses that I assure
you will never make the Fortune 500. Yet these small operations
are the heart of my community. They provide good jobs, important
services, and many are going to be hit with unnecessary cost.
As you know, the federal act adds an employer mandate for all
firms with 50 or more full-time employees, regardless of their trade
or line of business. These businesses are still waiting for regulatory
definitions on seasonal and temporary workers and whether they
count toward that arbitrary 50-worker threshold. Theyre also facing the impact of the fee on small business health insurance plans.
While this is being called a fee, its actually a tax on small business.
The Congressional Budget Office, the CMS actuaryits an independent Medicare actuaryand the Joint Committee on Taxation
all confirm that these costs would be passed on to the consumer.
As a result of the Managers Amendment, House Resolution 3590,
the legislation exempts self-insured businesses and select, select,
not-for-profit insurers, corporations and labor unions.
Those exceptions are a devastating blow to small business because they are forced to bear the brunt of this tax in the form of
significant premium increases in a fully insured market. Additionally, the law includes an unprecedented increase in Medicare payroll on income over $200,000 for individuals, 250 for joint filers.
Adding to the problem, wages are not indexed for inflation meaning
that more small businesses, particularly those employing 20 to 200
workers, will face this tax increase each year.
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Since the majority of small business owners pay their taxes at
the individual level, this tax will hit the business income of many
small business owners who collectively provide jobs for more than
one-quarter of the American workforce. Proponents of this federal
Act claim the cost and economic burdens of this mandate will be
offset by a small business tax credit. However, the reality is it will
do little to make purchasing insurance affordable for small firms.
Although the credit is intended to offset the cost of insurance, these
savings expire after five years at maximum.
I realize Ive gone over my time. I apologize for that. But in closing, I want to thank you for the opportunity to address this, and
I truly think its about time. Im grateful to see you out of the Beltway and out here addressing something that as we kick this can
down the road, the date of implementation of this with each passing day is a burden that a lot of people are starting to be quite well
aware of. So I thank you very much.
[The statement of Mr. White follows:]
Prepared Statement of Hon. Donald C. White, Senator, State of
Pennsylvania; Chairman, Committee on Banking and Insurance
Thank you for this opportunity to discuss the impact of the federal Patient Protection and Affordable Care Act on the individual states and employers, particularly
those doing business in the Commonwealth of Pennsylvania.
As Chairman of Pennsylvania State Senate Committee on Banking and Insurance, I have had a front row seat on the development of state action in the Commonwealth of Pennsylvania to comply with this law and I have discussed this matter at length with my colleagues, business leaders, hospitals, health care providers,
and consumers.
To begin with, I want make it clear that Pennsylvania is taking the initial steps
to comply with this federal mandate by January 1, 2013. The last thing that anyone
in Pennsylvania wants is for the federal government to take this over and issue addition edicts over the people of my stateand I am sure that feeling is echoed by
my peers from most other states.
And, yes, the Patient Protection and Affordable Care Act is yet another mandate
on states, on business and individuals and families.
We recognize that this legislation may have been passed along with the best of
intentions, but lets be clear that it is a mandate being passed along with little guidance, no funding for states or for the businesses that will be impacted by its requirements.
At this point, as the timeframe for compliance continues to elapse, let me make
it clear that there is a tremendous amount of anxiety and trepidation at the state
level and among the business community.
Yes, we are moving forward, in implementation, but this progress is tempered by
sense of pragmatic caution.
No one is comfortable with taking an aggressive approach in implementation.
Weve had little to no guidance on this matter.
Nor do we have a model to work from.
It is true that Massachusetts and Utah have developed systems similar to what
is being mandated by the Patient Protection and Affordable Care Act, but those systems are vastly different in structure and I dont believe that either would serve
as an appropriate model for Pennsylvania.
With legislation pending in the US Supreme Court and with a presidential election set for November, there is a lack of confidence that federal Patient Protection
and Affordable Care Act will stand unscathed and remain unchanged when all is
said and done. The actions we take now may end up being superfluous and even
contrary to ultimate compliance if this measure, or any part of it, it ultimately becomes effective.
This uncertainty has had a detrimental effect on Pennsylvanias economy, business growth and job creation in Pennsylvania.
At this point, no one is even certain what must be covered under the Patient Protection and Affordable Care Act. The states and employers see a requirement for
essential health benefits, but no one knows what is going to fall under the parameters of an essential benefit.
11
Granted, the federal Department of Health and Human Services is currently providing some latitude to the states in this area, but it remains an area of contention
and likely a fertile ground for continued litigation.
The controversy surrounding mandated contraceptive coverage is a prime example
of the controversy that will surround this provision and it certainly will not be the
only area of contention. As Ive seen on numerous occasions at the state level, and
particularly in insurance coverage as monitored by the Committee on Banking and
Insurance the broad questions of whats in and whats out and the various nuances therein are rife for dispute and contention.
As additional essential benefits are added, the cost that must be borne by government and employers will increase as well. We still need answers to some important actuarial value and cost-sharing questions that will truly determine whether
the package is affordable.
Looking down the road, the costs of this mandate on the states are already set
to increase because of the Medicaid expansion, as was clearly described by Forbes
on January 27, 2012:
The health reform law passed in March 2010 provides for a substantial expansion of the must cover populationessentially anyone from a family with income
below 138% of the federal poverty line (an amount that varies based on family size).
This is a major component of the health reform law: according to the Congressional
Budget Office, half the uninsured who they project to become covered as a result
of new law will obtain coverage because of the Medicaid expansion.
From the states point of view, the problem is, how will they come up with the
money to cover their share of the cost of health care for these additional people?
The health reform law provides a partial answer: the federal government will pay
for the entire cost of coverage for those who are newly eligiblebut only for the first
three years, from 2014 to 2016. The federal government will reduce its contribution
to 95% in 2017, then in stages, dropping to 90% in 2020 and thereafter.
For states to pay 10% of the cost may not seem like much, though it might turn
out to be quite a substantial sum of money, given the large numbers of people involved. The fact is that most state budgets are already strained, and Medicaid
spending is already one of the largest items in every state budget.
I strongly concur with the authors opinion. In fact, one of the key cost drivers
in the proposed 2012-13 state budget unveiled by Governor Corbett on February 7,
2012 were mandated increases of more than $800 million in the Department of Public Welfare. The Governor responded to those mandates by proposing to shift expenditures within the Department, which ultimately could result in increased costs
for counties and/or a reduction in human services available for citizens.
An increase in state Medicaid costs, even if only 10 percent of the expansion, will
assuredly have an adverse impact on Pennsylvanias state budget and would lead
to further reductions in support for other key services and programs and/or a broadbased tax increase on employers and/or individuals.
In particular, small business owners are going to be crushed by the federal Patient Protection and Affordable Care Act. I live in the small borough of Indiana,
Pennsylvania. We have a fair-sized state university surrounded by quite a few small
businesses that will never make the Fortune 500 list. Yet, these small operations
are the heart of the community. They provide good jobs and important services and
many are going to be hit with unnecessary costs.
As you know, the Patient Protection and Affordable Care Act adds an employer
mandate for all firms with 50 or more full-time employees, regardless of their trade
or line of business. These businesses are still waiting for regulatory definitions on
seasonal and temporary workers and whether they count toward that arbitrary 50
worker threshold.
They are also facing the impact of the fee on small business health insurance
plans. While this is being called a fee, it is actually a tax on small business. The
Congressional Budget Office (CBO), CMS Actuary (an independent Medicare Actuary), and the Joint Committee on Taxation (JCT) all confirm that these costs will
ultimately be passed on to consumers. As a result of the Managers Amendment to
H.R. 3590, the legislation exempts self-insured businesses and select not-for-profit
insurerscorporations and labor unions. These exemptions are a devastating blow
to small business, because they will be forced to bear the brunt of this tax in the
form of significant premium increases in the fully-insured market.
Additionally, the law includes an unprecedented increase in Medicare payroll on
income over $200,000 for individuals and $250,000 for joint filers. Adding to the
problem, wages are not indexed for inflation, meaning that more small businesses,
particularly those employing 20 to 200 workers, will face this tax increase each
year. Since the majority of small business owners pay their taxes at the individual
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level, this tax will hit the business income of many small business owners who collectively provide jobs for more than one-quarter of the American workforce.
Proponents of the Patient Protection and Affordable Care Act claim the costs and
economic burdens of this mandate will be offset by a small business tax credit. However, the reality is it will do little to make purchasing insurance affordable for more
small firms. Although the credit is intended to offset the cost of insurance, these
savings expire after five years at maximum. Only 309,000 small businessesout
of the four million advertised by proponentshad claimed the credit as of October
2011.
In summary, this mandate will negatively impact the Commonwealth of Pennsylvania is many ways. Without knowing what costs and mandates they will ultimately
be subjected to, business owners have told me that they are hesitant to hire on new
staff without know what, if any additional costs they will be subjected to if certain
provisions of the Patient Protection and Affordable Care Act become effective.
Plain and simply, this law and the uncertainty that surrounds it are job killers.
Again, I thank you for this opportunity to address this panel and provide you with
the facts about how this measure is impacting the Commonwealth of Pennsylvania,
our businesses, our individuals and our families.
I would now be happy to answer your questions.
Chairman ROE. Thank you, Senator White. Your comments and

all of your testimony will be in the record in full.
Ms. Bishop?
STATEMENT OF KATHLEEN BISHOP, PRESIDENT/CEO, MEADVILLEWESTERN CRAWFORD COUNTY CHAMBER OF COMMERCE
Ms. BISHOP. Congressman Kelly, Congressman Roe, thank you

for the opportunity to testify before the Subcommittee on Health,
Employment, Labor and Pensions. I am president and CEO for the
Meadville-Crawford County Chamber of Commerce. Our chamber
is 205 years old this year, and we represent over 500 businesses
in the northwestern Pennsylvania area. We are a community of
tool and die manufacturing, professional services, medical facilities,
gas and well services and home to Allegheny College.
I am not a healthcare expert, and I am definitely not an expert
on the healthcare reform law. I am a chamber president who has
passion for business owners and employees who want to work for
awesome companies. My time with you this afternoon is limited, so
I will share with you a few concerns and comments of our chamber
members.
But before I do, I would just like to give you an example of the
impact that will happen in our own chamber. With us being 205
years old, we are a nonprofit organization, and we depend on our
members to pay their dues just to maintain our existence. We have
a staff of five that varies in the ages of 40 to 65 years old. Not all
of our employees want or need healthcare benefits provided by the
chamber.
However, under the new healthcare reform bill, in 2014 we will
face a $2,000 fine per employee. Now, $10,000 may not seem like
a lot of money to other businesses, but for us, it means a lot. Membership in our chamber is $250 per member. We would need to
grow and retain an additional 40 members per year above and beyond what we are already growing just to pay this fine, or we
would have to raise the price of our membership dues. Neither of
these two options would we be able to attain.
13
With the economy as the buzz word and businesses pulling back
on marketing to offset the cost of labor and goods, we are already
finding that membership dues at a local chamber of commerce is
not on the priority list. We could struggle to make it to our 210 anniversary. Nonprofits are facing many challenges. Rising state and
local taxes and unemployment taxes, raising costs on holding
events for the benefit of communities and promoting our member
businesses and employees who are not typically paid well.
We believe that healthcare is essential. I am one of the employees who have health insurance at the chamber; however, I also in
the past have looked for employers that have optional healthcare
coverage, and that is my right as an American. It should also be
the right of my employer.
Back in the day, if you were looking for work, you either chose
the employer who had benefits or who didnt. You also knew that
if they offered health insurance, you had a good chance at a retirement plan, vacation pay and paid holidays, but sometimes you just
wanted a good old-fashioned job where you worked on straight commission and you took care of yourself. Just as men and women are
not the same size and created equal, neither are businesses created
equal.
The Healthcare Reform bill cannot be a one size fits all. We
should have the right to choose. I am here today representing over
500 businesses, and I have asked them to give me some thought
on healthcare reform. Heres what just a few of them said. One
chamber member business says stop advertising on TV for prescription drugs. Repeal the reform. Just let private businesses continue
to work with health insurance companies and brokers to allow
them to be competitive and thrive. Our rates were comparable
today to what they were ten years ago with the same coverage and
minimal out-of-pocket expenses for our employees. More government will just screw it up even more.
Another chamber business says allow healthcare insurance companies to cross state lines. If car insurance companies can do it,
why cant the health insurance carriers. As a small business, there
are some days when it is tough enough just to make payroll. I cant
even imagine also paying a fine because I couldnt afford to pay for
health insurance.
Lastly, our chamber also shares the echos of the U.S. Chamber
of Commerce, and here are their concerns. The U.S. Chambers
plan to control cost, improve quality and expand coverage, point
one, repeal the most enormous provision of PPACA. The new
healthcare law creates new mandates and taxes on businesses and
individuals. While the chamber supports the repeal of the Patient
Protection and Affordable Care Act, we recognize that the total repeal in the 112th Congress is unlikely.
Therefore, we stand ready to work with Congress to repeal the
provisions, including the employer mandate and many new taxes
that will be passed onto employers and employees in the form of
higher premiums.
Two, push back through written comments on regulations implementing PPACA. The chamber has filed over 28 comments to highlight the operational problems and unintended consequences of the
14
rapidly drafted flawed regulations issued to instruct how to comply
with the new mandates and requirements on healthcare reform.
Three, enact meaningful medical liability reform. The chamber
supports healthcare caps on punitive damages and other medical liability reforms that ensure fair damage awards, eliminate frivolous
lawsuits and lower the costs.
Four, expand access to care. The chamber supports strengthening
employer-sponsored health insurance by expanding its availability
and affordability to every worker. We also believe that the playing
field must be leveled to allow individual consumers, families and
small businesses purchase coverage on a tax preferred basis while
protecting the benefits of a uniform federal regulatory system.
Five, support consumer-focused healthcare. Congress should
make account-based plans more attractive to small businesses increasing the flexibility and improving the transparencies of cost
and quality data to permit Americans to shop smart for the best
care. We support repealing the ban on flexible spending accounts
and house savings accounts to purchase over-the-counter products
without a prescription and repealing the limitation on flexible
spending account contribution levels to 2,500. Realign reimbursement mechanisms to reward quality, not quantity.
We urge Congress make it easier for employers and insurers to
develop insurance plans that they pay for quality, not quantity, to
reward doctors for keeping patients healthy.
Seven, rein in Medicare and Medicaid fraud abuse. Medicare and
Medicaid fraud runs rampant and costs taxpayers tens of billions
of dollars every year. A broad array of countermeasures should be
enacted immediately.
And, lastly, advocate for workplace wellness and disease management. The chamber supports favorable tax treatment for companies
who offer workplace wellness plans and incentive participation.
Thank you for the time this afternoon. Thank you for your willingness to serve our great country. And I urge you to repeal the
healthcare reform bill and let Americans get back to work.
[The statement of Ms. Bishop follows:]
Prepared Statement of Kathleen Bishop, IOM, President/CEO,
Meadville-Western Crawford County Chamber of Commerce
Thank you for the opportunity to testify before the Subcommittee on Health, Employment, Labor, and Pensions.
I am President/CEO of the Meadville-Western Crawford County Chamber of Commerce. Our Chamber is 205 years old and represents over 500 businesses in the
Northwestern PA area. We are a community of Tool & Die, Manufacturing, Professional Services, Medical facilities, Gas & Well Services and Allegheny College.
I am not a healthcare expert and I definitely am not an expert on the Health Care
Reform Bill. I am a Chamber President who has a passion for business owners and
employees who want to work for awesome companies. My time with you this morning is limited and so I will share with you a few comments our Chamber members.
Our Chamber is 205 years old, a non-profit organization that depends on its members to pay their dues for us to maintain our existence. We have a staff of 5 people
that varies in ages from 40-65. Not all the employees want or need health insurance
from us. However, under the Health Care Reform Bill, in 2014 we could face a
$2,000 fine per employee. Now $10,000 is not a lot compared to many other businesses, but here is what it will mean to us.
Membership is $250.00 per member; we would need growth and retain an additional 40 businesses per year above what we are already growing just to pay the
fines. Or, we would have to raise the price of the dues. Neither is an option. With
the economy as the buzz word and businesses pulling back on marketing to offset
15
the costs of labor and goods we are finding that membership dues at your local
Chamber of Commerce is not on the priority list. We could struggle to find it to year
210!
Non-Profits are already facing many challenges, rising state and local taxes and
unemployment taxes, rising costs on holding events for the benefit of the community
and promoting our members businesses and employees who are not typically paid
well.
We believe that Health Care is essential; I am one of the employees who have
the health insurance at the chamber. However, I look for employers to have as an
option Health Care coverage, and that is my right as an American. It should also
be the right of my employer.
Back in the day, if you were looking for work you either chose the employer who
had benefits or you didnt. You also knew that if they offered Health insurance then
you had a good chance at a retirement plan, vacation pay and paid holidays. But,
sometimes you just wanted a good old fashioned job where you worked on straight
commission and you took care of yourself.
Just as men and women are not the same size and created equal, neither are
businesses created equal, the Health Care Reform Bill cannot be a one size fits all.
We should be able to choose!
Because I am here today representing over 500 businesses I had asked them to
give me some thoughts on the Health Care Reform Bill and here is what just a few
said.
One chamber member business says:
Stop TV Advertising of prescription drugs.
Repeal reform.
Just let private businesses continue to work with health insurance companies
and brokers and allow competition to thriveour rates are comparable today to
what they were 10 years ago with the same coverage and minimal out of pocket expense for our employees.
More government will just screw it up more!
Another Chamber member business says:
Allow Health Insurance companies to cross state lines. If car insurance can do
it, why cant health insurance carriers.
As a small business, there are some days when it is tough just to make payroll.
I cant imagine having to also pay a fine because I couldnt afford to purchase health
insurance for the employees.
Lastly we share the same thoughts as the U.S. Chamber of Commerce
The U.S. Chambers Plan to Control Costs, Improve Quality, and Expand Coverage:
Repeal the most onerous provisions of PPACA: The new health care law creates
new mandates and taxes on businesses and individuals. While the Chamber supports the repeal of the Patient Protection and Affordable Care Act (PPACA), we recognize that total repeal in the 112th Congress is unlikely. Therefore, we stand ready
to work with Congress to repeal the most egregious provisions, including the employer mandate and the many new taxes that will be passed on to employers and
employees in the form of higher premiums.
Push back through written comments on regulations implementing PPACA: The
Chamber has filed 28 comments to highlight the operational problems and unintended consequences of the rapidly drafted, flawed regulations issued to instruct
how to comply with the new mandates and requirements of health reform.
Enact meaningful medical liability reform: The Chamber supports health
courts, caps on punitive damages, and other medical liability reforms that ensure
fair damage awards, eliminate frivolous lawsuits, and lower costs.
Expand access to care: The Chamber supports strengthening employer-sponsored health insurance by expanding its availabilityand affordabilityto every
worker. We also believe that the playing field must be leveled to allow individual
consumers, families, and small businesses to purchase coverage on a tax-preferred
basis while protecting the benefits of a uniform federal regulatory system.
Support consumer-focused health care: Congress should make account-based
plans more attractive to small businesses by increasing flexibility and improving the
transparency of cost and quality data to permit Americans to shop smart for the
best care. We support repealing the ban on using Flexible Spending Accounts and
Health Savings Accounts to purchase over-the-counter products without a prescription and repealing the limitation on Flexing Spending Account contribution levels
to $2,500.
Realign reimbursement mechanisms to reward quality, not quantity: We urge
Congress to make it easier for employers and insurers to develop insurance plans
that pay for quality, not quantity, and reward doctors for keeping patients healthy.
16
Rein in Medicare and Medicaid fraud and abuse: Medicare and Medicaid fraud
runs rampant and costs taxpayers tens of billions of dollars every year. A broad
array of countermeasures should be enacted immediately.
Advocate for workplace wellness and disease management: The Chamber supports favorable tax treatment for companies that offer workplace wellness programs
and incent participation.
Thank you for the time this afternoon. Thank you for your willingness to serve
this great country. I urge you to repeal the Health Care Reform Bill and let America
get back to work!
Chairman ROE. Thank you, Ms. Bishop.

Ms. Koehler?
STATEMENT OF GEORGANN KOEHLER, RETIRED SEIU
MEMBER, PSYCHIATRIC AIDE
Ms. KOEHLER. Today I stand here in front of you to tell you the
story of a man who fell through the cracks of a broken healthcare
system, never to return to us again. That mans name is Billy. He
is my beloved brother.
Billy was the born on March 18, 1951. He was baptized William
Anthony, but he was always Billy to me. He was a good kid and
grew up to be a great man. My sister, Katie, describes him as a
man who was loving and generous to his family, friends and those
in need. That love and generosity came easy to him because of his
loving relationship with his Lord and Savior, Jesus Christ.
Billy was a true believer in the teachings of the Lord that we are
our brothers and sisters keepers. Because of that belief, Billy was
a quiet hero to many. Billy suffered his first cardiac arrest when
he was 39. He was diagnosed with having a sudden death type of
arrhythmia. There is no cure for this arrhythmia, but it is recommended that the patient have an implanted AICD ready to fire
at any time.
Billy was discharged from the hospital with his life saving
defibrillator. He had insurance through his job, so caring for his
heart and his defibrillator wasnt a big deal.
In the spring of 2003, Billy went to work. He heard the news
that the company would be closed. It closed a few days later. No
more VCRs to repair, no more job, no more health insurance. He
sent out application after application hoping to find another job
that offered a fair wage and health insurance. He went on interviews, but that job was nowhere to be found, especially for a man
who had to wear a Medic Alert bracelet.
Billy didnt want the government to give him anything. He wanted to buy a private health insurance plan. He called every health
insurance company in Pittsburgh in the hopes of buying a private
plan, but the answer was always the same: Denied due to his preexisting condition. Billy found a job delivering pizza. The job paid
minimum wage with no benefits, but nonetheless, he was thankful
for the work.
On December 14, 2007 Billy collapsed at work. He was rushed
to a local hospital and was admitted to a 23-hour monitored bed.
His cardiologist came into the room and said, Mr. Koehler, youre
a very lucky man. Your defibrillator battery is so low, Im surprised
it fired this time. It needs to be replaced. The doctor told Billy the
replacement would be done as an outpatient procedure and that he
17
needed to make an appointment to be seen in the office in three
months.
Billy said, I have no insurance and I dont know if Ill have it
by the time of the appointment. If I dont, what will happen? The
doctor said, If you dont have insurance, you will have to pay up
front, and you will have to bring thousands of dollars with you, or
you will not be seen. Billy said, I dont know what to do because
I dont have thousands of dollars nor does my family. I dont know
what to do.
It was then the doctor said, Mr. Koehler, do you put oil in your
car? Billy didnt answer. The doctor said, Mr. Koehler, I asked
you a question. Do you put oil in your car? Billy replied, Of
course, I put oil in my car. The doctor then said, Do you buy the
best oil money can buy so your car runs smoother and lasts longer?
Because thats what you have to do for your heart. Billy said,
Youre talking about a can of oil that costs me $8.50 to a
defibrillator that cost me $10,000, and that doesnt include the surgery. Ill never have that kind of money.
It was then the doctor pointed his finger at Billy and said, You
get your priorities straightened out and youll come up with that
money. The doctor left the room and discharged Billy from his
service. Billy was discharged from the hospital on December 15,
2007.
Billy was pro life. He believed in the importance of life from conception until natural death. I only saw him mad or angry three
times, when he heard Terri Schiavos tube feeding was going to be
discontinued, when his cardiologist gave him that humiliating lecture comparing putting oil in his car to taking care of his heart,
and on that day of discharge, that day when he walked out of the
hospital with a death sentence handed down by a broken
healthcare system and realized that in our country, unless you
have money, you will never have your health.
On March 6, 2009, Billy went to church to spend his hour at Adoration. He knelt before the altar thanking and praising God for his
blessings and for that job. He asked God to bless his family, friends
and those in need. He asked his All Mighty Healer to heal his
heart. Billy left work to come home at 5:00 p.m. on March 7, 2009.
He drove two blocks, came to a stop sign, put his car in park and
slumped into his steering wheel.
Compassionate strangers came to his aid. They brought him out
of his car and began CPR while others stood in silence offering
their prayers. A teenager placed his sweatshirt under Billys head
in a gesture of comfort for a man in need. That day these compassionate strangers didnt care if Billy had health insurance. All they
cared about and all that mattered to them was doing what they
could to give Billy back another day of life, something his cardiologist could have done, should have done, and told him no can do.
So why didnt he?
The answer is found in a word, and that word is written throughout his medical record. That word is uninsured.
Today Im not here to ask you to feel mine and my familys pain.
I would never want to take you there. I am going to ask you though
when you have a minute, maybe watching the sun go down or
standing on the porch sipping a cup of decaf, to close your eyes and
18
look inside yourself, not to your heart, but to your soul because
that is where you will find your moral compass. And ask yourself
this question: If Billy was alive today, would his life matter to you?
Would you be one of those compassionate strangers trying your
hardest to give Billy another day of life? If when you open your
eyes the answer is yes, then you will not be able to repeal Affordable Care Act, an Act that would have saved Billys life and an Act
that is a hopeful light for millions of Americans who without it are
only left with the thought of death. Thank you. Sorry I went over.
[The statement of Ms. Koehler follows:]
19
20
Chairman ROE. Thank you very much for your testimony.

Lori Joint?
STATEMENT OF LORI JOINT, DIRECTOR OF GOVERNMENT
AFFAIRS, MANUFACTURING AND BUSINESS ASSOCIATION
Ms. JOINT. Good afternoon. My name is Lori Joint, and Im the

director of government affairs of the Manufacturing and Business
Association, a regional employers association that represents more
than 4,500 members throughout 27 counties in Pennsylvania. I
would like to thank Chairman Roe and Congressman Kelly for pro-
21
viding this opportunity to the discuss Patient Protection and Affordable Care Act and its impact on the business community.
Our member companies have been very clear in expressing their
concern and uncertainty over the law and its potential implications
and costs causing many employers to hold off on plans for growth
and investment in their business operations. We strongly believe in
the need for healthcare reform and have advocated for it for decades. But the act fails to address many of the long-term problems
associated with the cost of healthcare. We have called for marketbased reforms rather than government takeover of the healthcare
industry.
The Act proposes numerous tax hikes that will slow economic
growth, reduce employment and suppress wages. A recent study
from the Heritage Foundation finds that the Act contains 18 separate tax increases that will cost taxpayers $503 billion between
now and 2019. The Cato Institute calculates that the Act will result in more than $606 billion in new increased taxes over its first
ten years. And the Congressional Budget Office estimates that the
employer mandate will cost businesses $52 billion in tax penalties
from 2014 to 2019.
Employers are concerned about many aspects of the law. Specific
examples and details are in my written testimony. Id like to focus
this time on comments from some of our member companies as
they are the true job creators.
From Randy in Erie, PA: The PPACA will literally kill my business. We currently employ approximately 200 people, 50 full time
and 150 part time. We are a minimum wage based business. Due
to competition, our average wage is $7.65 for part time and $8.50
78 for full time. Adding health insurance would be approximately
twice the cost of the $2,000 penalty. On an hourly basis, Id have
to add $1.44 per hour plus administration costs to cover this.
All of my competitors with less than 50 employees would automatically win every bid by 20 percent. To summarize, the first year
of the Act will cost me every bid and $150,000 in penalties making
it my last year of earning a living and providing meaningful employment.
From Paul Reid in Lockport, New York. Our company has an office in Erie, PA as well as a number of retail stores named Crosbys. This law will drive up healthcare costs and dampen employment opportunities. Businesses will reduce costs by eliminating
employees in the market. Government bureaucrats cannot manage
the healthcare industry. Only markets can accomplish this task,
markets driven by consumer choice and consumer responsibility,
one of the aspects that this law affirmatively rejects. This is not
being considered in the damaging effects of the taxes embedded in
this law.
From Mark in Meadville, PA. Mark says their company welcomes
opportunity for industry recommended solutions to address the cost
of compliance with care and reduce the competition that embodies
government-mandated provisions for employee benefits. Without
more competition among insurance providers, the inevitable single
payor system for a government-run healthcare program will be the
only option. He says their company has evaluated the cost impact,
22
and under the law, they will likely eliminate their healthcare coverage.
From Raine at Hermitage Health, Cambridge Springs. We
strongly feel that the Healthcare Reform Act will significantly increase health insurance costs, lead to rationing, long waits for services, drive doctors out of their field and severely limit options. We
will likely be forced to drop all coverage and let employees fend for
themselves.
From Don in Corry. Our premiums are going up eight percent
this year. I think it is unfair we have to cover children up to age
26 even if they are couch potatoes. I completely agree with providing coverage while they are in college or technical school, but
this is typical socialism. Youre essentially training our youth to expect entitlements at any early age. The law penalizes employers
with more than 50 employees that have an employee who opts out
of our insurance plan. We are penalized $2,000 per employer per
year. Who wouldnt opt out and let the government provide the insurance? What happens if everyone does this?
More examples can be found in my written testimony. Health insurance has long been the biggest concern of most businesses and
they would truly welcome cost effective reform. However, they dont
consider the PPACA as cost effective reform. Looking forward,
theres cause to believe small businesses will see higher premiums,
greater administrative burdens, reduced options and many unwanted surprises.
In summary, we need to reform the system in a way that controls costs. We would ask for market-based reforms that allow individuals a tax deduction on their premiums, require all doctors, hospitals and providers of healthcare services to list their services,
outcomes and pricing, create total transparencies from insurance
companies, on all provider contracts and administrative fees, apply
a moratorium on all unfunded government mandates, allow for the
purchase and sale of insurance products across state lines, allow
individuals and employer sponsored plans to purchase specific services they want and need as opposed to government-mandated benefits and services, provide immediate tort reform and allow insurance companies to properly calculate risk by imposing additional
premium charges to those who refuse to make changes to risky lifestyle activities.
This represents a small list of actions that would have an immediate impact on reducing the cost of healthcare, insurance premiums and utilization.
Thank you once again, Chairman Roe, and members of the committee, for your interest in learning more about the needs we want
on reform.
[The statement of Ms. Joint follows:]
Prepared Statement of Lori Joint, Director of Government Affairs,
Manufacturer & Business Association*
Good afternoon. My name is Lori Joint and I am the Director of Government Affairs at the Manufacturer & Business Association (MBA), a regional employers association that represents more than 4,500 member companies throughout 27 counties of Pennsylvania. With offices in Erie, Williamsport, and Harrisburg, we provide
*Additional information and sources included in written testimony.
23
information and services to our members that will assist them in the pursuit of
their business and community interests.
I would like to thank Chairman Roe and members of the House Subcommittee on
Health, Employment, Labor and Pensions, for providing this opportunity to discuss
the impact of the Patient Protection and Affordable Care Act (PPACA) on the business community. The law is extremely complicated and there are many rules and
regulations yet to be finalized. Our member companies have been very clear in expressing their concern and uncertainty over the law and its potential implications
and costcausing many employers to hold off on plans for growth and investment
in their business operations.
We strongly believe in the need for health-care reform and have advocated for it
for decades. But the PPACA fails to address many of the long-term problems associated with the cost of health care and insurance for small businesses. For the past
25 years, we have called for market-based reforms, rather than a government takeover of the health-care industry.
The PPACA imposes numerous tax hikes that will slow economic growth, reduce
employment and suppress wages. A recent study from the Heritage Foundation
finds that the Act contains 18 separate tax increases that will cost taxpayers $503
billion between now and 2019. The Cato Institute calculates that the PPACA will
result in more than $669 billion in new or increased taxes over its first 10 years.
Employers are concerned about many aspects of the law including: the requirement for plan sponsors to start reporting health-care premiums on their employees
W-2s, the Patient Centered Outcome Research Fund Fees and the pending Quality
of Care Reporting requirements. These are examples of government intervention in
the free-enterprise system. I will discuss a few additional sections of the law that
are of concern to the business community.
The employer mandate and Essential Health Benefits requirement have many
businesses concerned and will likely cause the most harm to businesses already offering coverage. The Congressional Budget Office (CBO) estimates that the employer
mandate will cost businesses $52 billion in tax penalties from 2014 to 2019. Companies will be forced to adjust by raising prices, cutting wages and benefits, and reducing their work force.
The PPACA small business tax credit is complex and narrowly focused. Less than
one-third of small businesses meet the size and contribution requirements to qualify
for the tax credit. This percentage shrinks if a company increases their work force,
gives raises to employees, employs family members, has part-timers or is more generous with their insurance offeringsbasically discouraging businesses from hiring
or rewarding employees. (Specific example in written testimony)
More details on these items as well as additional concerns regarding: new Medicare taxes, Subsidies, Grandfathered status, Exchanges, Mini-meds and the Health
Insurance Premium Tax can be found in my written testimony. You will hear many
facts and statistics today, some of which are included in my written testimony. I
would like to focus this time on comments from some of our member companies; as
they are the true job creators.
Bonded Services, Inc., Erie, PennsylvaniaRandy R. Nyberg, President/CEO238
employees
The PPACA will literally kill my business and the janitorial services industry
(along with lawn care and security services to name a few). Our business currently
employs approximately 200 people (50 full-time and 150 part-time). We are a minimum-wage based business due to competition (the minimum wage is $7.25 per hour
and our average wage is $7.65 for part-time and $8.50 for full-time). This hourly
wage does not include purchasing health care insurance, which is totally
unaffordable, and would be approximately twice the cost of the $2,000 PPACA penalty. The penalty for my business would be in excess of $150,000 annually. On an
hourly basis, I would have to add $1.44 per hour plus administration costs to cover
this. All of my competitors with less than 50 employees would automatically win
every bid by 20-percent. To summarize, the first year of PPACA will cost me every
bid and $150,000 in penalties, making it my last year of earning a living and providing meaningful employment to hundreds.
The Reid GroupPaul Reid, PresidentLockport, NY64 employees
Our company has an office in Erie, Pennsylvania as well as a number of retail
stores named Crosbys. This law will drive up health-care costs and dampen employment opportunities. Businesses, especially small businesses like ours, will reduce
costs by eliminating employees in the margin. Government bureaucrats cannot manage the health-care industry, only markets can accomplish this task. Markets driven
by consumer choice and consumer responsibility are the key to fixing health care,
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and one of the aspects that this law affirmatively rejects (fewer HSAs). This does
not even consider the damaging effects of the taxes embedded in this law; they will
crush our economy in my opinion.
Tech Tool and Molded Plastics, Meadville, PennsylvaniaMark Hanaway, VicePresident114 employees
Mark says their company welcomes the opportunity for industry recommended solutions to address the cost of compliance, cost of care, and reduced competition that
embodies government mandated provisions for employee benefits. Without more
competition among insurance providers, the inevitable single-payer system or government run health-care program will be the only option. He says their company
has evaluated the cost impact and under current law, they will likely eliminate their
health-care coverage.
Ray Overholt, Executive Director, Hermitage House Youth Services, Cambridge
Springs, Pennsylvania90 employees
We strongly feel that the health-care reform act will significantly increase health
insurance costs, lead to rationing and/or long waits for services, drive doctors out
of their field, and severely limit options. We will likely be forced to drop all coverage
and let employees fend for themselves.
Cynthia Kramer, Kramer Automotive Specialties, Butler, PAFive employees
The new law set up unfunded mandates that have cost us more in employee
health insurance. Highmark has gone from a not-for-profit to a for-profit company,
and they are surcharging us based on the health of our employee group because
they anticipate their costs to skyrocket. To get the cheapest plan available, coverage
has gone up for our small group by 24 percent, from $531 to $649. Our coverage
to keep the better plan we had before was $794 per person. Our good healthy years
no longer count as we grow older. We are surcharged for the age of our group as
well as the groups health. Next year, I will no longer be offering employee health
care if I cant get a rate under $500 per person. I cant afford it. My employees are
like family to me, and I want to provide health care, but how can a small business
do so with rates like these?
North Country Brewing Company, Slippery Rock, PABob McCafferty, Co-owner
60 employees
I own a brewery with a brewpub attached. I also represent 34 restaurants in Butler County for the Butler County Tourism and Convention Bureau. I feel that there
are many honest employers who do what they can for their employees, and dont
need the government in their day-to-day business. Restaurants have razor thin profit margins. We offer health care to full-time employees and hope they build their
career with us. We struggle to remain open due to the government-involved regulations and the way they have expanded in such a short time. The more regulations,
the more paperwork, longer timelines and impossible prices are killing businesses.
The health-care reform law just adds one more layer. I think if the government
wants to run all of our businesses, then they should start by reviewing their own
P&L.
EA Mundkowsky Finishing LLCElsie A Mundkowsky, Owner/President
The health-care law is so complicated that you have to have an attorney just to
be able to know what is expected. I know that it will cost me money and I am already hanging by a thread. I really dont think that my business can handle much
more out-of-pocket. There are so many regulations, insurances and taxes that it is
so hard to keep my head above water. So as a very small business owner, I must
tell you that I cant afford anything else. I just want to pay the people that work
for me, pay my bills and I get no help from the government at all. I just keep getting taxed and taxed to death. Profit must be a dirty word.
Corry Micronics, Corry, PennsylvaniaDon Pavlek, President30 employees
Our premiums are going up 8-percent this year. I think that it is unfair that we
have to cover children up to age 26 even if they are couch potatoes. I completely
agree with providing coverage while they are in college or technical school but this
is typical of socialism. We are essentially training our youth to expect entitlements
at an early age. The law penalizes employers with more than 50 employees that
have an employee who opts out of our insurance plan. If we are penalized $2,000
per employee per year, who wouldnt opt out and let the government provide the
insurance. What are the consequences if everyone does this?
In addition, I received many shorter responses with similar comments and common themes. Health insurance has long been the biggest concern of most businesses
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and they would welcome cost-effective reform. However, they do not view the
PPACA as cost-effective reform. Looking forward, there is cause to believe that
small businesses will see higher premiums, greater administrative burdens, reduced
options and many unwanted surprises.
Thank you for your interest in learning more about the business communitys
view on health-care reform. We need to reform the system in a way that controls
cost through private market forces. We would ask for market-based reforms that:
allow individuals a tax deduction on their premiums; require all doctors, hospitals
and providers of health-care services to list their services, outcomes and pricing; create total transparency from insurance companies on all provider contracts and administrative fees; apply a moratorium on all unfunded government mandates; allow
for the purchase and sale of insurance products across state lines; allow individuals
and employer-sponsored plans to purchase the specific services they want and need,
as opposed to government-mandated benefits and services; provide immediate tort
reform; and allow insurance companies to properly calculate risk by imposing additional premium charges for those who refuse to make changes to risky lifestyle activities. This represents a small list of actions that would have an immediate impact
on reducing the costs of health care, insurance premiums, and utilization.
Thank you once again, Chairman Roe and members of the committee, for taking
the time to hear from so many concerned business owners and constituent groups
throughout this process.
Chairman ROE. Thank all the witnesses. You all have done a
great job. Were going to try to stay within our five minutes. Let
me start by saying you cant getwhen you look at the healthcare,
this has bugged me from day oneis that healthcare should not be
a Republican or Democrat problem. Its an American problem. Ive
never seen a Republican or a Democrat heart attack in my life. Ive
never operated on a Republican and Democrat cancer.
The hardest decision Ive had in my life was to sit down next to
a friends bedside and say, Theres nothing more I can do for you
as a physician. Youre in Gods hands. Ive dealt with that over the
three decades in my life. Its not about whetherits whats the
best way to do it. How much should government be involved?
Do we need healthcare reform? Absolutely. Well, what did this
plan do? And what concerned me greatly are our senior citizens. It
took $550 billion out of an already underfunded Medicare plan. I
am Medicare age. Im on Medicare. We have 3 million baby
boomers retiring each year going to the Medicare system. In ten
years, were going to have $550 billion less to spend on 36 million
more people. I can tell you whats going to happen. Youre going to
have less access to care. The quality of your care is going to go
down and the cost is going to go up. Thats the first time in the
history, taking money thats designated for our senior citizens and
move it to another entitlement, very first time in the history of our
country.
I run a business and my healthcare out of my practice. And we
have a situation where we pay about $6,000 per employee. Ms.
Joint, you mentioned this is extremely important. Businesses
around that 50 mark, or in my case, 350, if I go out and pay this,
if one person moves off into the exchange, I then can drop my employees off into the exchange, and I can save myselfI can pay a
$2,000 fine. I got to pay tax on that money. I can save $3,000 per
employee. For me thats $900,000 to my business. Why wouldnt I
do that?
Businesses are asking why wouldnt I ask Secretary Sebelius
that. I can tell you a Fortune 500 company came to my office in
D.C. and said its going to cost us $120 million, this mandate is.
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Because remember, you dont get to decide what your health insurance is. Essential benefit package is decided by the government,
not you and your business and what you can afford. The example
I used at lunch today is veryso bear with me.
Ive been fixed. My wife has been fixed. We got three grown kids.
We dont need any more children. I got two grandkids. But an essential benefits packageand Im going to jump off the tallest
building in Johnson City, Tennessee face first in the parking lot if
I thought I was going to have another child at my age. You get the
idea. But an essential benefits package may require me to buy fertility insurance coverage for my wife. Shes 55, 56 years old.
So the question is: Why shouldnt those decisions be made? Why
arent companies going to do exactly what I just mentioned?
Ms. JOINT. Im not sure I understand exactly what is
Chairman ROE. If youre about 50, why wouldnt you drop it and
pay the fine and have your employees going into the exchange?
Ms. JOINT. That is the argument or the question, I guess, or the
concern of a lot of the businesses. In their cases, for many of them
depending on what their costs are, it would make more sense to do
that. But then the question becomes what if everybody does that?
Where does the money come from to paper all that? There have
been estimates of how many people go into the exchanges and what
that would do fiscally.
Chairman ROE. Another thing I liked about all this isI have
three childrento allow your adult-aged child to stay on until age
26. Thats a good deal. It actually costs about two and a half percent of a premium to do that. So it does increase the cost, but what
people dont tell you about that is what if you dont have a mom
and dadthe way the actuaries do this now, it used to be a six to
one. You could charge anybody at my age six times what you would
charge a young adult. Now that ratio has been changed to three
to one. So a youngster thats out there now trying to buy insurance
on their own that doesnt have a parent that can afford it, their
price just went up two times.
Senator White, I want to ask you a question. In Tennessee we
tried healthcare reform in 1993 called TennCare. Its a managed
care plan. Basically it coveredbecause were not a very rich state.
We have a lot of people and our per capita incomes are low. We
tripled our cost in ten years. Our Governor Haslam and Governor
Bredesen, who is a Democrat, had to deal with it as to the 2,000,
almost bankrupted our state. Right now this mandate to expand
Medicaidquite frankly, the Medicaid and the 26 year olds may be
the most coverage thats expanded. It could be between 15 and 24
million more people on Medicaid.
How is that going to affect the budget of the State of Pennsylvania if you added that many more people? You all have probably
done the estimates.
Mr. WHITE. The situation with the budget of Pennsylvania,
which as I know Congressman Kelly is aware, is about as streamlined as you possibly could get it. The $800 million of additional
premium in dollars that we have to spend on Medicare coverage
this year is on a $27.2 billion budget, pretty dramatic, considering
that if we had aour governor in his infinite wisdomwe had a
$500 million surplus last year, and despite a lot of people that
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wanted to rant and rave about spending that money decided to
hold onto it. Thank God, because we have an $800 deficit this year.
Just compound that year after year after year, not even to begin
to mentionif I may make one statement, Congressman.
This is near and dear to me. I dont know of any other landmark
legislation thats ever been done at the Congressional level that
wasnt done by bipartisan support. Thats not the case here. Thats
not the case at all. The number of stakeholders that had limited
input into this piece of legislation is abominable.
Chairman ROE. Senator, my time has expired, but I will make
one final statement. There are countless issues in the 111th Congress, 115 of them this year. Not one time was I asked about anything in the 2,500 page bill, which I read in its entirety, maybe one
of the few people. As I said today, it doesnt say a lot about my intelligence, but I read every page of it, and there have been ten that
areand the regulatory writers are still writingover 10,000
pages of rules right now and still counting.
Yield the time now to Mr. Kelly.
Mr. KELLY. Thank you, Mr. Chairman. I want to thank you, everybody, that came before us today in testifying. Im going to come
about it from a little different approach. What we talked was a
field hearing on healthcare challenges and facing Pennsylvanias
workers and job creators. I just want to make sure that we understand. This has never been about healthcare, never been about the
things that touchpull at our heart strings. Its about what we can
afford to do and what we can provide. And then what happens
when we realize that theres a lot of things that this bill puts in
there that are totally unaffordable and decrease the amount of accessibility.
So if its about affordability, its about accessibility, it certainly
missed the mark. Senator, I know what Pennsylvania faces. Really
the challenges we face today in everything that were looking at,
all the shortfalls we have are because of the fact that we dont have
enough people working. We dont have enough companies making
profits. Because the last time I looked, tax revenues drive all of
these opportunities and all of these packages that we have available. Services we have available for people is paid for by taxpayers,
hard working Americans that go to work every day and spend their
money on taxes that the state collects, local municipalities collect,
school districts collect, the federal government collects, and every
time they buy something, theres a sales tax. You are so overtaxed
right now, I just wonder whatthe old saying is dont worry about
the mule; just slow the wagonat what point does the mule say
Im unhitching myself from the wagon.
Again, this is not about somebodys healthcare. This is about affordability and accessibility. And I have to tell you from a guy who
hires people, when I dont know what its going to cost to actually
pay somebody, its hard to make that decision. And I would ask
you, because in your years since 2001, as you go through your district, the number one concern of job creators, small business people,
what do you hear from them?
Mr. WHITE. Well, in this case, they talk about fees. But theyre
talking we need jobs. We need job creators. We need entrepreneurs.
And in this environment we currently have in Pennsylvania, as
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youre very well aware, Congressman, to come to Pennsylvania and
want to conduct a business and be from out of state, be from out
of countrythis is a global economyin my opinionand youre an
exception; you had a very exceptional career as a local businessmanI think youd have to be one of three things: Youd have to
have family entrenched here in Pennsylvania or youd have to be
philanthropist or youd have to be plain stupid. And I mean that
sincerely about our working environment here in Pennsylvania.
Were behind so many different states. You at the national level
are well aware of our CNI and a few other of our little issues. My
hope is thatyou put a burden like this on top of this, which
doesnt address cost of insurance, all this is is minor insurance reform. This has nothing to do with the cost.
How can you discuss overall medical reform when you dont even
discuss for one minute tort reform, medical malpractice and defensive medicine, Doctor? How does this happen? Does everybody in
your position and my position want to make sure that everybody
out there has access to affordable insurance? Yes, we do. But the
key word is affordable, and you cant place the burden on one segment of society.
Mr. KELLY. Thank you, Senator.
Ms. Bishop, also Ms. Joint, because you come into contact with
so many small business people and job creators, truly if this nation
is to recover, it will come from the small sector. It will come from
the private sector and job creators, small business people. Thats
where its going to come from. Its not going to come from government growing bigger and bigger every day which takes more and
more out of your pocket to operate. Its going to come from the private sector.
You talk to people every day, as I do. Just if you could, because
youre involved with associations, some of the challenges that your
folks face. You talk to them on a very personal basis and you know
what theyre talking about when theyre wringing their hands and
theyre saying I want to be able to do this. Im just not sure what
its going to cost me. I think thats the part thats so hard to explain to people. As a job creator, as an employer, you really dont
know what this is going to cost you ultimately.
If you could, Ms. Bishop and Ms. Joint, because you talk to so
many of these folks on a very personal basis, if you could just share
a little bit of that.
Ms. BISHOP. Youre exactly right, Congressman. Part of the challenge is when youre running a business, you have a budget set up.
You know how much income is coming in, and you anticipate how
many expenses are going to go out. Could you imagine trying to
run that budget and having no idea how much in expenses, you
dont know how much in income. We cant even do that on our own
personal level. You know when you bring home your paycheck how
much in bills you have to pay. Well, what if all of a sudden you
didnt know what your bills are and you dont know if your salary
is even going to be able to match a quarter of it, half of it, or what
the case may be.
There are a lot of scared business owners in our community, and
healthcare is just one piece. The other part of it is we have jobs
in northwestern Pennsylvania. We cant get people to go to work.
29
Two reasons. One, they cant pass a drug test. Two, they dont want
to come off the unemployment extended vacation plan. So that is
a huge concern in our community. So you compound those three together, and youve got a lot of business owners really worried about
the future.
Mr. KELLY. Thank you. Ms. Joint.
Ms. JOINT. Ive been with our association for almost 20 years,
and Ive met some wonderful, wonderful business owners all over
the State of Pennsylvania and beyond. I can tell you they do care
about their employees. They do want to see good things happen
and help them and have things be reasonable; however, some of the
comments that I didnt have time to include in my testimony today
is, you know, my employees are like family to me. This is so hard
for me, but I literally cannot afford one more thing.
And what a lot of it comes down towe do a lot of surveys and
we go out and meet, talk with businessesits regulations. First,
they dont understand it, and thats, I think, one of the biggest
things. Now that Ive really studied a lot of the different parts of
this, there are so many different parts of this law that people have
no idea, that dont even make sense. Theres no common sense to
it. I think youre seeing that as the federal government starts to
back out of some of the things and change some of the things
theyve done.
So its the uncertainty of this, but its the regulations. They look
at this in many ways as what more. I cant tell you how many
times I hear One more thing and Im out of business, one more
thing and Im going to have to lay off people that work for me,
theyre going to have no job, because we literallyI dont want
people to think all these businesses are makingIm not talking
even a GE or whatever.
Im talking your typical, what most of our members are, which
are your five employees to 25 employees, and they feel like they
cant get a break. And this is one more thing on top of it. Its very
sad as a human being and a person to go out and see these things.
Its very, very sad. So its one more regulation on top of what
theyre already facing.
Mr. KELLY. Thank you. And just so you both can weigh in, were
not talking about huge employers like GE and GM and AK Steel.
Were talking about very small family-owned businesses that struggle every day to make it, and they hire our sons and daughters and
theyre the ones that enable us to stay in the communities we live
in right now by providing that type of work.
So thanks so much for coming here today. Senator, its good seeing you again. Ms. Koehler, thank you so much.
Chairman ROE. Just one final statement before you leave. I think
youve all been great, great panel. Let me say that Secretary
Sebelius has granted over 1,700 waivers so far. If this bill was that
great, why would you have to have 1,700 waivers? Let me give
youwhen they wrote this, it was written with such speed and
went through no committee hearings. The Senate, the bill, did not
have any committee hearings.
I picked this up and wrote to the IRS. When you have a state
run exchange, the subsidies that the federal government gave you
are not as much as what your employers have been paying, and the
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other is not tax deductible. So it cost the person getting the insurance through the exchange more. When you get in the weeds and
start reading this, about half of you understand that.
Secondly, what they did in this was stagnatemissed that tax
deductibility on the state run, the government run, federal run exchange. Texas is facing that right now. So they created an IRS
problem with the people in Texas.
You all have been great. Thank you very much. Well let you go
and then well have the second panel step up.
Before we introduce our next panel, Mr. Kelly, Id like to introduce for the record the Ranking Member, Rob Andrews, who would
like to include a statement.
Without objection, so ordered.
[The information follows:]
Prepared Statement of Hon. Robert E. Andrews, Ranking Member,
Subcommittee on Health, Employment, Labor and Pensions
Good Morning, Mr. Chairman. As we all very well know, health care costs have
been skyrocketing for decades. And for decades, Congress failed to do anything
about it. Recognizing that reforming this countrys health care system could wait no
longer, congressional Democrats passed and President Obama signed the historic Affordable Care Act into law nearly two years ago.
This law takes control of health care away from the multibillion dollar insurance
industry and returns it to American families where it belongs. And, while much of
the law will not be fully implemented until 2014, today, millions of Americans are
already benefiting.
Medicare is stronger. Seniors are paying less for prescription drugs. Young adults
are able to stay on their parents health plan. Children who need life-saving medical
attention can no longer be denied coverage due to a pre-existing condition, and all
Americans are protected against lifetime limits and rescissions. Additionally, small
employers can obtain substantial savings in health care costs through the small
business tax credit.
Pennsylvanians now have long overdue protections against their insurance companies.
Nearly 7.7 million Pennsylvania residents can no longer be subjected to a lifetime limit cap on their health coverage.
Nearly 680,000 Pennsylvanians no longer face the uncertainty that their health
insurer can drop their health coverage when they need it the most.
More than 32,000 young adults in Pennsylvania may now have coverage
through their parents health plan because of the law.
Nearly 4,400 previously uninsured Pennsylvanians with a preexisting condition
have already obtained coverage through the laws Pre-existing Condition Insurance
Plan.
Employers are also realizing the benefits of the law. More than 179,000 small employers in the state may be eligible for the laws small business tax credit. More
than 430 employers in Pennsylvania and their employees are paying less for retiree
health care after receiving more than $106 million in financial assistance through
the Early Retiree Reinsurance Program.
And when the Affordable Care Act is fully implemented, the law will extend access to quality, affordable health care coverage to those who need it. Americans will
no longer fear losing their health insurance if they change jobs, decide to start a
small business or have a preexisting condition.
Employers could see even more savings through the elimination of pre-existing
condition underwriting, medical loss ratio standards, states successfully combating
unreasonable premium increases, and reforms such as Accountable Care Organizations that pay for quality of outcomes, rather than quantity of tests.
Seniors are also seeing significant benefits right now. Last year, 235,820 Medicare
beneficiaries in Pennsylvania who hit the Medicare prescription drug donut hole
saved a total of $156 million on their prescriptionsan average of $662 per beneficiary. That is a significant savings. One million seniors on Medicare received at
least one preventive service last year, including almost 59,000 annual wellness visits, without cost sharing or deductibles. With the passage of the Affordable Care
Act, Pennsylvania has received funding to plan for a health insurance exchange,
support programs that prevent illness and promote health, strengthen the health
31
care workforce, and invest in groundbreaking biomedical research. Specifically, the
state has received:
More than $48 million to support 231 projects in the state that show potential
in producing new and cost-saving therapies. More than $18 million for primary care
training that will expand and support Pennsylvanias primary care workforce.
$2 million to allow school based health centers to expand and provide more
services to students in Pennsylvania.
Nearly $2 million for community and clinical prevention services that will help
Pennsylvania prevent and manage costly conditions.
A $1 million exchange planning grant to conduct the research and planning necessary to build a health insurance exchange.
Despite doomsayers, putting patients and doctors back in control of their health
care hasnt hurt the economy. In fact, more than 500,000 jobs have been created in
the health care field since the laws enactment with more than 3.5 million private
sector jobs created overall nationwide.
All of these critical reforms would vanish if the law is repealed. Seniors would
pay more for their prescriptions and preventive care, young adults would no longer
have to ability to stay on their parents plan, and insurance companies could once
again discriminate based on a preexisting condition.
While House Republicans have pressed for repeal, their only alternative to the Affordable Care Act thus far has been a proposal to end Medicare as we know it.
This would be a disaster for our nations seniors. This plan will increase costs
faster and shift more of the burden on the back of seniors themselves. Even after
paying into the system for decades, the 107,000 individuals between 44 and 54 in
this congressional district would have to pay more than $6,000 per year in increased
costs in 2022 and pay about $12,000 more per year in increased costs in 2032 under
the Republican plan to end the Medicare guarantee.
To cover these additional costs, a 54-year-old would need to save $182,000 by the
time he or she retires to purchase health insurance. I dont know a whole lot of
working people who can scrape up an extra $182,000 before they retire.
As we approach the second anniversary of the Affordable Care Act, we should be
reinforcing the protections that hard working families now enjoy under the law. We
should not be finding ways to end Medicare. In closing, spending our precious time
refighting the same political battles will not move this country forward. The American people deserve better. In the short time left in this Congress, we should be
working together to put more Americans back to work and strengthen the middle
class.
Mr. KELLY. Thank you, Mr. Chairman. Our second panel is also
made up of local business owners all from this area, and I think
its really important to understand the whole purpose of this hearing was not to ask you to come to Washington, D.C. so Washington,
D.C. could hear your concerns. It was to come out in the field and
meet you in the places where you live and the businesses that you
run, be able to get your feelings and your weigh-in on what the federal government is doing.
First Id like to introduce Ms. Cathyann Kanterman. She serves
as the chief financial officer for Associated Ceramics & Technology
in Sarver, PA. Associated Ceramics & Technology employs 33
Pennsylvanians and specializes in engineering and manufacturing
complex ceramic products. Thank you, Ms. Kanterman.
Mr. Paul Nelson, as you may remember, he was our Veteran who
we asked to do the Pledge of Allegiance. I want you to listen to
where Mr. Nelson came from. Hes the owner of Waldameer Park
& Water World in Erie, PA which a lot of us know because we grew
up going there on weekends. Mr. Nelson started at Waldameer as
a dishwasher 67 years ago, and hes owned that park since 1978.
The park employs 400 part-time seasonal workers.
Mr. Nelson, thanks for being here.
Also, Mr. Ralph Vitt, who owned Vitt Insurance in Pittsburgh for
20 years. His expertise was in providing business owners with
32
healthcare. Mr. Vitt holds both a Bachelors and a Masters degree
from the University of Akron in Akron, Ohio.
Good to have you with us. Thank you.
Mr. Will Knecht is the president of the Wendell August Forge in
Mercer, Pennsylvania. If theres a person in this area that doesnt
know of Wendell August Forge and have a piece in their home,
then you havent lived here very long. Mr. Knecht runs the oldest
small metal forgery in the United States producing what I think
is the most beautiful handwrought metal that Ive seen since 1923.
Thank you all for being here, and we appreciate you taking time
out of your professional and private lives to come and share your
experiences with us. Mr. Chairman.
Chairman ROE. Remember the light system. Five minutes. It will
turn amber when youve got one minute, turn red when your time
is expired. We will not gavel you right in the middle of it, but
please try to wrap it up, if you would.
Ms. Kanterman?
STATEMENT OF CATHYANN KANTERMAN, CHIEF FINANCIAL
OFFICER, ASSOCIATED CERAMICS & TECHNOLOGY
Ms. KANTERMAN. Thank you, Mike, for inviting us here today,

first of all.
Secondly, our business was started by my father and two partners over 45 years ago. So were a family-owned business, and Im
part of the family, and Ive been working there for over 20 years.
Ive been involved with the purchase of our employee benefits for
over 15 years. We have 41 employees. We offer healthcare insurance to our full-time employees, and we currently cover 33 employees healthcare insurance at a cost of more than a quarter of a million dollars per year. Add to that our HRA reimbursements in 2011
of $12,000.
The Federal Patient Protection and Affordable Care Act of 2010
is concerning for me mostly on the things it did not do. It did not
reduce the cost of insurance. It did not reduce the uncertainty of
offering insurance. It did not force insurance companies to disclose
any information to purchasers, us employers. And it did nothing to
address the supply side of the healthcare equation.
As far as reducing the cost of insurance, the affordable care part
of the title of this bill was a misnomer. The bill added coverage to
millions of people. Its my belief that anyone who thinks you can
cover more people and reduce the overall cost of insurance must be
delusional. The tax on medical device manufacturers and the small
business insurance tax will be passed onto us, the employers. The
fact that so many employers and unions have requested exemptions
from provisions of the bill indicate that those employers and unions
do not believe the Act will reduce the cost of insurance.
Our insurance this past year increased 11 percent. So again, I
dont see how that is affordable care. In regard to reducing the uncertainty of offering insurance, as more and more provisions of the
Act are enacted, the uncertainty of offering insurance to our employees will certainly increase. The uncertainty is part of the reason that we are currently using temporary services to fill our position and working overtime with our current employees rather than
adding additional employees.
33
We also need to be mindful of the additional requirements as we
approach the magical number of 50 employees. At that number we
will not be eligible for healthcare exchanges. We will be subject to
penalties if we choose not to offer insurance. Another area of uncertainty is the FSA limits. Currently if one of our employees covers
more than just the individual employee, we offerwe, the company, pays two-thirds of the premium and the employee pays the
one-third, and we do that through a premium only FSA.
With the new limit of $2,500 for the tax deductible part of that
FSA, our employees will no longer be able to cover the full onethird of their premium payment. And this is basically a tax increase on working class employees. And keep in mind thats at todays cost. It doesnt factor in any future increases on those premiums. Suppose that the lack of tax deductibility of the premium
and the increase in insurance encourages our business to drop the
coverage and pay our employees a flat rate to cover their own insurance. I would predict other than employees with known health
issue, many of our employees would take those premium dollars,
put them in their pocket and pay the penalty rather than purchase
individual insurance policies due to the artificially low penalty that
this bill imposes.
When those employees get sick or have health problems, the
elimination of preexisting conditions from insurance policies will
make it easy for them to buy insurance at that time. Therefore,
only truly sick people will be buying insurance, and the cost of insurance will probably be astronomically high. So the penalty for
buying insurance will also have to increase astronomically. This
will cause our employers to come back to us and request a pay increase to cover the cost of either the insurance or the penalty. How
can this not lead to inflation. Where are the market forces?
With regard to forcing insurance companies to disclose information to employees as the purchasers of insurance, I think that Congress could have actually used this bill to help us as small employers when we are dealing with health insurance companies. As I
told you in the opening, we pay a quarter of a million dollars for
our insurance.
Our health insurance provider does not tell us how much money
they pay on behalf of our employees. You know that they know a
hundred percent exactly how much they pay, but they dont have
to tell us unless we have more than a hundred employees. Our
business is too small to put time and effort and financial resources
into a program like a wellness program without knowing what the
pay-off or potential pay-off might be.
As to the supply side of the healthcare equation, it bothers me
that this bill does nothing to address supply. Where is the assistance to get more primary care doctors or nurse practitioners? How
can you expect to give coverage to millions of people and not expect
that they want to see a provider?
Finally, Im concerned about being caught in the excise tax on
high cost plans, the so-called Cadillac tax, even though I dont
think our plan is a Cadillac plan. The excise tax goes into effect
in 2018. We are only 20 percent below the threshold amount for the
excise tax in 2012. With an average increase of 11 to 13 percent,
34
I see zero chance that we wont be in that excise tax, and thats
basically a tax on us as a small business.
Its disappointing from a business perspective. When the Congress had a chance to make a change in healthcare insurance in
America, instead of choosing to make the health insurance industry
operate more like a market, they chose to come up with this whole
new concept of accountable care organizations which have not been
defined and cannot be shown to make the market operate more efficiently.
They increase demand without addressing supply and, as far as
I can tell, did nothing to address the cost of care.
Thank you for your time, and I appreciate being heard. I also appreciate that Congress repealed the 1099 provision.
[The statement of Ms. Kanterman follows:]
Prepared Statement of Patti-Ann Kanterman, Chief Financial Officer,
Associated Ceramics & Technology, Inc.
My name is Patti-Ann Kanterman. I would like to thank Congressman Mike Kelly
for inviting me here today. I am currently the Chief Financial Officer of Associated
Ceramics & Technology, Inc. This is a family-owned business that manufactures industrial ceramics for which I have been working for over 20 years. I have been involved with the purchase of our employee benefits for over 15 years. We have 41
employees. We offer health care insurance to our full-time employees. We currently
cover 33 employees health care insurance at a cost of more than a quarter of a million dollars per year. Add to that HRA reimbursements in 2011 of over $12,000.
The Patient Protection and Affordable Care Act of 2010 is concerning for me mostly on the things that it did not do.
1. It did not reduce cost of insurance.
2. It did not reduce uncertainty of offering insurance.
3. It did not force insurance companies to disclose information to the purchasers
(employers).
4. It did nothing to address the supply side of the health care equation.
As far as reducing the cost of insurance, the Affordable Care part of the title
of this bill is a misnomer. The bill added coverage to millions of people. It is my
belief that anyone who thinks that you can cover more people and reduce the overall
cost of insurance, must be delusional. The tax on medical device manufacturers and
the small business insurance tax will be passed on to purchasers (employers). The
fact that so many employers and unions have requested exemptions from provisions
of the bill indicates that those employers and unions do not believe that the Act will
reduce the cost of insurance. In fact, our average increase in insurance over the last
14 years has been 13%, despite our increase of the deductible for our plan from $0
to $1,250 per person and the addition of an HRA where we reimburse our employees
for one-half of the deductible. Our premium increase from 2011 to 2012 was 11%.
We have not realized a reduction in our cost. This is not what I would call Affordable Care.
In regard to reducing the uncertainty of offering insurance, as more and more provisions of the Act are enacted, the uncertainty of offering insurance to our employees will increase. The uncertainty is part of the reason that we are using temporary
services to fill our open positions and working overtime with our current employees
rather than adding additional employees. We also need to be mindful of the additional requirements as we approach the magical number of 50 employees. At that
number, we will not be eligible for health care exchanges and we will be subject to
penalties if we choose not to offer insurance. Another area of uncertainty is FSA
limits. Currently, if one of our employees covers more than the individual, we pay
23rds of the premium and allow the employee to cover their portion of the premium
through a premium only FSA. With the new limit of $2,500 for a tax-deductible
FSA, our employees will no longer be able to cover all of their portion of the premium payment through the FSA, effectively increasing the taxes for the employees.
This is a tax increase on working class employees. Keep in mind that this is at todays cost. It does not address future premium increases.
Lets suppose that the lack of tax deductibility of the premium and the increase
in insurance cost encourages our business to drop coverage and pay employees a flat
rate to purchase their own insurance. I would predict that other than employees
with known health issues, most of our employees would take those premium dollars
35
and put them into their pocket and pay the penalty rather than purchase an individual insurance policy, due to the artificially low penalty. When those employees
get sick or have a health problem, the elimination of pre-existing conditions from
insurance policies will make it easy for those employees to purchase insurance at
that time. Because only truly sick people are buying insurance, the cost of insurance
will probably be astronomically high, so the penalty for not buying insurance will
increase astronomically as well. This will cause our employees to come back to us
and request a pay increase to cover the cost of either the insurance or the penalty.
How can this not lead to inflation? Where are the market forces in this legislation?
With regard to forcing insurance companies to disclose information to the employers as the purchasers of insurance, I think that Congress could have used this bill
to actually help us as a small employer when we are dealing with health insurance
companies. As I told you in my opening, we pay a quarter of a million dollars in
health insurance premiums. Our health insurance provider does not tell us how
much they pay out on behalf of our employees. In fact, our health insurance company tells us that they do not need to tell us that information until we have over
100 employees. I do not think this is fair. You know that they know exactly how
much they pay out. I do not want to know how much they pay for employee A
versus employee B, I just want to know the total. It is hard to justify the cost of
a wellness program when the insurance company wont disclose information. Our
business is too small to put time, effort, and financial resources into a program and
hope for a payoff.
As to the supply side of the health care equation it bothers me is that the bill
does nothing to address supply. Where is there assistance to get more primary care
doctors or nurse practitioners? How can you think that you will give health care coverage to millions more people and not suspect that they will want to actually see
a provider?
Finally, I am concerned about being caught in the Excise tax on High-Cost plans
(the so called Cadillac tax) even though I dont think that our plan is a Cadillac
plan. The excise tax goes into effect in 2018. We are only one 20% below the threshold amount for the excise tax in 2012. At an average of 11-13% annual premium
increases, I see the chances of not meeting the threshold for the excise tax as extremely slim. So this is another tax on our business in addition to the small business health insurance tax. Why would the Congress want to add more taxes to small
businesses?
It is disappointing that from a business perspective, when the Congress had a
chance to make a change in health insurance in America, instead of choosing to
make the health insurance industry operate like a market, they chose to come up
with a whole new concept of Accountable Care Organizations, which have not been
defined and cannot be shown to make the market operate more efficiently. They increased demand without addressing supply, and as far as I can tell did nothing to
address the cost of care.
Thank you for your time and attention. If nothing else comes of my testimony,
I feel better having been heard.
Chairman ROE. Thank you, Ms. Kanterman.

Mr. Nelson, I appreciate your service. I, too, one summer at Boys
Scout Camp washed 350 dishes three times a day. I decided at that
point in timethat had, in fact, convinced me that chemistry was
not that hard.
Mr. Nelson, youre up.
STATEMENT OF PAUL NELSON, OWNER,
WALDAMEER PARK & WATER WORLD
Mr. NELSON. Thank you very much. First of all, I want to say
one thing. We have been successful because we do long-term planning. We have a five-year plan. We have a ten-year plan.
No way can Congress, the Senate or the President help a small
business if they cant make long-term plans. Its the most important thing you can do. Our bank needs to know this. Our management team needs to know it. And our employees need to know it.
My name is Paul G. Nelson, and Im owner and CEO of
Waldameer Park, Inc. in Erie, PA. The park opened in 1896 as an
36
amusement park, and we added a water park to the complex.
There are three generations of our family working in Waldameer.
We have engineers, my daughter whos on a heart team. We have
a lot of college employees. And when you think about seasonal
businesses, our full-time employees make more money than people
working in plants.
I graduated in 1955 with a college degree in business from Michigan State. Then I served in the Army. At the completion of my tour
in Germany, I came home and became manager of our family business. I started working when I was 11. I have done every job in
the park. In fact, dishwashing was easy.
I wanted a promotion when I was 12, and I was pretty big for
my age. So I asked the right person. He said, Dont worry. When
you come back, youve got that better job. I had a keyring, two
keys and a whistle. And, boy, was I impressed until I found out
I knew where his office was, over the ladies room. And every hour
on the hour all summer long I blew that whistle, and I cleaned the
toilets in the park.
Im still working full time. Im 78, and I love it. Ive been active
in our community, in our industry. Ive been past president of the
following organizations: I was president of the Millcreek Township
Chamber of Commerce, and I merged it with the city because I believe that bigness cuts cost. I was president, and we started in our
park office the Erie County Tourist and Convention Bureau. I was
president of the Pennsylvania Amusement Park Association. I was
asked and was on the bored of our International Association of
Amusement Parks and Attractions several times. I was asked to be
president. I couldnt do that because its a four-year obligation and
youre traveling all over the world.
The majority of family-owned amusement parks in Pennsylvania,
in our nation, have gone out of business in the last 10 to 20 years.
Waldameer is one of the few successful family-owned amusement
parks that continue to grow. We are definitely a small business.
We only have 18 full-time employees, and we have 400 seasonal
employees. The majority of the seasonal employees are high school
or college students.
We have continued to grow by having long-term plans, sticking
to our family goals, plus an excellent relationship with our bank.
And how do you get a good relationship with your bank? You pay
your bills. You have long-term plans. I meet with the bank four
times a year. Of course, I do admit that I get a free meal. We operate with a small dedicated full-time staff. Have a good relationship
with our outside contractors. We spend hundreds of thousands of
dollars outside our park having small contractors work for us.
We find out its best to go to the experts. Were good at what we
do, but there are other people that are better at doing some of the
stuff we thought we could do. We do this for major projects. For
example, at one time we could buy a major ride for $25,000 and
install it ourselves. Today a major ride costs in the millions, and
we could not install without the help from the manufacturer and
experts in this construction.
For those who know about the Ravine Flyer II, it was voted the
best coaster in the world. It was built the year it came up. This
37
year will be its fifth season. That cost our small park $7 and a half
million.
Waldameer is one of the major engines in the promoting of our
regional recreation, and we have spent millions of dollars. We advertise between Buffalo, Pittsburgh and Cleveland on over 150
radio stations.
We know that health insurance is very expensive. We felt we
should do something to help our full-time employees with the cost.
Many years ago we decided to pay 100 percent of the cost. About
ten years ago to help control what our employees were doing with
their insurance and because of the rising of the cost, we had the
employees pick up 20 percent. So any new employee pays 20 percent. We pay 80.
But all the old-time employees, which is half of our crew, I promised that I would pay a hundred percent. So we still do and we will
until each one of those retire. Our employees feel this is a very fair
decision, and we all work together.
Our health insurance is handled by HealthAmerica. The family
rate is $12,587 annually. Then it works down for other classifications. What worries us about the government is for our part-time
employees. We are a seasonal business. We work 90 days a year.
Thats where the money comes in. The rest of the time were spending it. We worry about the state of the economy, but we also worry
about the weather. Its a major factor in our annual success.
The majority of our part-time employees are students, and many
of them are already on their parents health insurance policies. Insurance companies do not want to put on part-time people for those
part-time people could jump on the policy, have something done,
and jump off. Therefore, our cost would go up to pay for this, and
thats something that worries me.
The simple fact is we cannot afford health insurance for 400
part-time employees. Waldameer, one of the main engines to promote our tourist industry in northwest Pennsylvania, would just be
out of business, and no one would benefit from us leaving the
scene. Thank you.
[The statement of Mr. Nelson follows:]
Prepared Statement of Paul T. Nelson, Owner and CEO,
Waldameer Park, Inc.
My name is Paul T. Nelson and I am owner and CEO of Waldameer Park, Inc.
Waldameer opened in 1896 as an amusement park and added a water park to the
complex. Today there are 3 generations of our family working at Waldameer.
I graduated in 1955 with a college degree in business from Michigan State, then
served in the U.S. Army. At the completion of my tour in Germany, I came home
and became manager of our family business (at 11 years old I started working at
Waldameer, and am still a full-time employee at the age of 78). I have been active
in our community and industry, being past president of the following organizations:
Millcreek Township Chamber of Commerce, Erie County Tourist and Convention
Bureau, Pennsylvania Amusement Park Association, and on the Board of the International Association of Amusement Parks and Attractions several times.
The majority of family owned amusement parks in Pennsylvania and our nation
have gone out of business in the last 10 to 20 years. Waldameer Park is one of the
few successful family-owned amusement parks that continues to grow. We are definitely a small business, with only 18 full-time employees and approximately 400
seasonal employees, and the majority of those are high school and college students.
We have continued to grow by having long term plans, sticking to our family goals,
plus an excellent relationship with our bank.
38
We operate with a small, dedicated full-time staff and have good relationships
with outside contractors who supplement our staff when we have major capital
projects. For example, at one time we could buy a major new ride for $25,000 and
install it ourselves. Today, a major ride costs in the millions and we would not be
able to install it without help from the manufacturer and experts that specialize in
this type of construction.
Waldameer is one of the major engines of promoting our region as a recreational
area and have spent millions of dollars advertising between Buffalo, Pittsburgh and
Cleveland.
We know that health insurance is very expensive and felt that we should help
our full-time employees with this cost. Many years ago we decided to pay 100% of
the cost. About 10 years ago, to help control how our employees were using their
health insurance and to help defray the cost increases, we decided that new fulltime employees would pick up 20% of the cost and we would pay for 80%. For the
old-timers we still pay 100%, as that is what I promised to do. Waldameer employees feel that this is a fair decision.
Our health insurance is handled by Health America and the family rate is
$12,587 annually and works downward for other classifications. What worries us is
what the government is planning for part-time employees. We are a seasonal business that is only open 90 days. We worry about the state of the economy, but the
weather is also a major factor in our annual success. The majority of our part-time
employees are students, and many of them are already on their parents health insurance policies. Insurance companies are not interested in part-time employees
being added to our plan. A part-time employee could have an expensive procedure,
then leave employment, sticking the insurance company with the bill. This increased cost would cause the insurance company to raise our rates.
The simple fact is that we cannot afford health insurance for 400 part-time employees, and Waldameer, one of the main engines of promoting the tourist industry
in NW Pennsylvania, would be out of business, and no one would benefit from this
situation.
Chairman ROE. Thank you, Mr. Nelson.

Mr. Vitt?
STATEMENT OF RALPH VITT, OWNER, VITT INSURANCE
Mr. VITT. Thank you for the opportunity to testify before this
panel. Today I realize how my alma maters, the University of
Akron, football team must have felt when they played Penn State
in Beaver Stadium opening season. To their credit, they stayed the
game all four quarters. I intend to do this also.
My name is Ralph Vitt. I owned Vitt Insurance Services in Pittsburgh for 20 years. My medical insurance company employed two
people, but I worked with countless small business owners over the
years helping them purchase insurance for themselves and their
employees. I have an appreciation of small business owners concerns and challenges in buying health insurance, which is why I
speak in support today of the Affordable Care Act.
There are many reforms in this new law. Some have been implemented already and others that will be put in place over the next
couple of years that will help small business owners. Most small
employers with whom I have dealt would prefer not to be part of
the healthcare delivery system as purveyors of medical insurance.
With the advent of insurance exchanges, they may get some relief both in purchasing a medical plan for their business or the possibility that many folks will purchase individual plans giving them
affordability to move to another job without loss of coverage.
In addition, the idea of having medical insurance that is not contingent upon being with a specific employer will allow employers
to staff their businesses with folks whose training, experience and
career paths are in sync with the success of their organization. At
39
the same time, employees will not be forced to remain in a position
for which they are not adequately trained or forego a different career path just because they need health insurance. The improvement in the productivity of the employee will, no doubt, improve
the profitability of the business.
Moreover, small business tax credits which are available to small
employers now will also help make insurance more affordable. The
nonpartisan small business majority found that one-third of small
business owners who do not offer health insurance will be more
likely to do so because of the tax credits and 31 percent of those
who do would be more likely to continue offering insurance because
of the tax credits.
In these difficult economic times, every dollar helps and small
businesses appreciate anything that will make insurance more affordable. I have seen other reports that small businesses are worried about the cost of healthcare. A small business majority also released polling that found most small businesses dont know about
many of the provisions to help them. Its no wonder theyre concerned. They dont know these things exist to help lower costs.
The wellness benefits are a big help in providing preventive medicine. If medical treatment is needed, reduce the cost of procedures
by acting early in the diagnosis. This will lower overall healthcare
costs across the board.
Additionally, allowing children to stay on their parents medical
insurance until age 26, regardless of student status, is an excellent
benefit to individuals entering the workforce. As an example, my
granddaughter will graduate from college in May 2012 and has a
job offer that will use her degree in international business. Her future employer, a small firm of eight to ten people, does not offer
a group medical plan. By staying on her fathers plan, she can accept the offer, work in a field for which she has trained, and begin
a career path right out of college.
Of the benefits that will be phased in over time, the guaranteed
issue of coverage without regard to preexisting conditions is, in my
opinion, the most important component of the ACA. Having sold
medical insurance for 20 years, I realize the frustrations people experience when they are declined for coverage due to medical history. If medical underwriting is no longer used and the threat of
adverse selection is reduced by requiring that individuals purchase
health insurance, the market will grow exponentially plus broadening the actuarial base used to determine rates. This will allow
individuals to select plans that fit more closely to their financial
and medical needs.
The Affordable Care Act, if allowed to be fully implemented and
refined, will go a long way to reforming the medical insurance system that began in the 1940s and has basically remained static
until today. Implementation of this law will not only help small
businesses thrive, but it will also help our economy as well. Thank
you.
[The statement of Mr. Vitt follows:]
Prepared Statement of Ralph Vitt, Owner, Vitt Insure
Thank you for the opportunity to testify before this panel. Today I realized how
my alma mater, the University of Akrons football team, must have felt when they
40
played Penn State in Beaver Stadium a few years ago. To their credit, they stayed
in the game for all four quarters as I intend to do.
My name is Ralph Vitt. I owned Vitt Insurance in Pittsburgh for 20 years. My
medical insurance company employed two people, but I worked with countless small
business owners over the years, helping them purchase insurance for themselves
and their employees.
I have an appreciation of small business owners concerns and challenges in buying health insurance, which is why I speak in support today of the Affordable Care
Act. There are many reforms in this new lawsome that have been implemented
already and others that will be put in place over the next couple yearsthat will
help small business owners.
Most small employers with whom I have dealt would prefer not to be a part of
the health delivery system as purveyors of medical insurance. With the advent of
insurance exchanges, they may get some relief both in purchasing a medical plan
for their business or the possibility that many folks will purchase individual plans
giving them portability to move to another job without a loss of coverage. In addition, the idea of having medical insurance that is not contingent on being with a
specific employer will allow employers to staff their businesses with folks whose
training, experience and career paths are in sync with the success of their organization.
At the same time, employees will not be forced to remain in a position for which
they are not adequately trained or forego a different career path just because they
need health insurance. The improvement in the productivity of the employee will
no doubt improve the profitability of the business.
Moreover, small business tax credits, which are available to small employers now,
will also help make insurance more affordable. The non-partisan group Small Business Majority found that one-third of small business owners who dont offer insurance would be more likely to because of the tax credits, and 31% of those who do
would be more likely to continue offering it because of them. In these tough economic times, every dollar helps and small business owners appreciate anything that
will make insurance more affordable. Ive seen other reports that say small businesses are worried about the cost of healthcare, but Small Business Majority also
released polling that found most small businesses dont know about many of these
provisions to help them. Its no wonder theyre concerned if they dont know these
things exist to help lower their costs.
The wellness benefits are a big help in providing preventive medicine, and if medical treatment is needed, reduce the cost of procedures by acting early in the diagnosis. This will lower overall healthcare costs across the board. Additionally, allowing children to stay on their parents medical insurance until age 26 regardless of
student status is an excellent benefit to individuals entering the workforce. My
granddaughter will graduate from college in May, 2012 and has a job offer that will
use her degree in International Business. Her future employer (a small firm of 810 people) does not offer a group medical plan. By staying on her fathers plan, she
can accept the offer, work in a field for which she has trained and begin a career
path right out of school.
Of the benefits that will be phased in over time, the guaranteed issue of coverage
without regard to pre-existing conditions is, in my opinion, the most important component of the ACA. Having sold medical insurance for 20 years, I realize the frustrations people experience when they are declined for coverage due to medical history.
If medical underwriting is no longer used and the threat of adverse selection is reduced by requiring that individuals purchase health insurance, the market will
grow exponentially, thus broadening the actuarial base used to determine rates.
This will allow individuals to select plans that fit more closely to their financial and
medical needs.
The ACA, if allowed to be fully implemented and refined will go a long way to
reforming the medical insurance system that began in the 1940s and has basically
remained static till today. Implementation of this law will not only help small businesses thrive, but our economy, as well. Thank you.
Chairman ROE. Thank you for staying on time.

Mr. Knecht?
41
STATEMENT OF WILL KNECHT, PRESIDENT,
WENDELL AUGUST FORGE
Mr. KNECHT. Thank you, Mr. Chairman. Again, its a real pleasure and a privilege to be here.
I represent 120 folks that I have the privilege of working with
in three states. A sad statement that Congressman Kelly said,
which is an honor, that were the largest manufacturer of metal
giftware in the country today on a large scale, and were a small
company. In the 1940 and 50s we had 200 competitors in America
making metal giftware. Today were the largest and almost the
only one still standing making it a hundred percent.
Thats an indictment on a lot of things, patriotism one of them.
But government regulations is the second issue that our industry
faces. Were in the giftware industry, and 98.9 percent of our competitors are made in China, in India, Mexico, Indonesia. We were
at a gift show just a few months ago where we were at a Made in
America pavilion. You would have thought we were rock stars for
making it in America. What a sad commentary. What a sad commentary that we are the exception and not the rule.
In fact, over the last couple of weeks, actually Monday and Tuesday of this week, Ive gotten two emails from a gentleman who represents a factory in China wanting to show his capabilities and
suggesting that he can fundamentally reduce the cost of us doing
business. Literally the guy is three emails in like two days. This
is not unique.
Our biggest competitor was a Pennsylvania company based in
Mount Joy, which is the eastern part of the state, Wilton Armetale,
a fantastic company. Just a few years ago they yanked 250 manufacturing jobs out of Mount Joy and moved them to Mexico and
China. Were trying to fight against that curve. All 120 of us are
trying to work together as a family to do that.
But anything you do in Washington, anything the Senator does
in Harrisburg that hinders our ability to compete on an international scale endangers every one of our jobs. I apologize Im
going off script. Im not nearly as smart or as well versed in every
detail on this bill as some of the colleagues who spoke earlier to
you.
But Im smart enough to know that 2,500 pages of a bill that no
one had time to read is going to include gotchas that none of us
understand, and one of them was just revealed just in the last couple of weeks with the mandate of abortion coverage to employers
of all sizes. I personally would be offended if I had to do that, and
many have spoken up.
But as we look at why were here today, I sense were here
todayshame on me as an American, shame on any American that
hasnt gotten behind this issue prior to March 2010 and come up
with a better solution. We have to have a better solution. The costs
are too high. We spendagain, were a tiny companyalmost
$400,000 just on healthcare in our little company. Thats crazy.
Thats crazy that we spend that money, but the cost is out of control.
The accessibility is crazy. Ill tell you a story. Its frustrating. We
are desiring to offer healthcare to all of our employees, part time,
full time. And literally we went begging almost to our insurance
42
carrier. Help us find a solution that we can pool together with
other people in the country to offer affordable healthcare for our
part-time people. Their answer was Well, there isnt one.
They didnt bring a solution back to the table because they didnt
know that one existed. Here we are desiring to cover 120 people.
Were not fighting against that. Were not saying we want to cut
people off. But we cant find the solution. So accessibility is an
issue that we face.
And as you look at the title of our theme, what are some problems that small business are facing, well, its the cost. 400,000
bucks is a lot of money. And then the inability when desiring to
offer. We cant find it.
You guys know far better than I whats in the bill, some of the
positives in the bill, some of the negatives in the bill. I appreciate
Mr. Vitts opinion on some of those things that I didnt know was
in the bill. They sound like good things. Portability is important to
folks, especially in this day and age when people are moving from
job to job. Theyre not taking a job for 40 years. Weve got to have
portability.
A story like Billys, its an embarrassment to us as Americans.
Its an embarrassment. But again shame on us as Americans that
we waited for Washington, D.C. to act. So I look at myself. I wish
I had a mirror to say shame on you that were here today, but we
are. And I just would suggest, as my time expires, I would just ask
that you look to repeal this onerous bill that no one understands
the full tenet of and deal with the heart of the problem, the cost
and accessibility for all Americans.
So thank you very much for hearing us out. Thank you for standing up, for doing whats right in Washington.
[The statement of Mr. Knecht follows:]
Prepared Statement of Will Knecht, President, Wendell August Forge
My name is Will Knecht and I am the President of Wendell August Forge, a family owned business headquartered in Grove City, PA. Since 1923 we have been
Americas leading manufacturer of metal giftware and commemoratives. I am proud
to work alongside 120 fellow employees in our stores and workshops in Grove City,
PA; Exton, PA; Berlin, OH; and Wilmington, NC. In my somewhat biased opinion,
our artisans are the finest in the world. In the 1940s and 1950s, we had approximately 200 competitors making metal giftware in America. Fortunately for us but
unfortunately for America, today, we stand alone as the last metal giftware company still making all of our products 100% in America. Many great companies have
simply closed their doors or off-shored their production to China, Mexico, and India.
In fact, just yesterday I received an email from a gentleman in Ohio who represents
a factory in China where they believe they can make our giftware much cheaper
than we are able to domestically.
As we focus today on challenges facing Pennsylvania companies regarding health
care, Id like to make 2 points relative to our company:
1. It is our desire that every employee that works with us is afforded an opportunity to receive health care during their employment with usbut we have found
no cost effective way to cover our part-time workers
2. The issue facing our company is the continuing escalation in our health care
costs as we are competing with foreign products which dominate our industry
I believe that we as a nation are about to walk into an unknown abyss that humbly I believe our country will face with the full effect and implementation of the
2010 health care bill in 2013-14. The fact that the Congress in 2010 delayed implementation of most of the provisions of the bill until after the 2012 Presidential election is another example of passing the buck and pushing back the burden for immediate political gain and expediency.
The shear monstrous size of the bill intimidates most Americans and provides so
many unknowns for the business community, it is scary. To paraphrase then-
43
Speaker Pelosi during the voting on the bill in the House We have to pass it so
we can read it. In other words, no one really knows all of the tentacles of this bill
and that is bad for America and bad for business. This was clearly demonstrated
over the past few weeks as the abortion funding mandate has been front and center
of the national discourse.
As a businessman, this is what I assume will be the impact to our company:
Higher taxes
More regulation, more mandates
More uncertainty
More administrative costs
A couple of the provisions/elements that I know of that are a cause for serious
concern amongst business owners:
The fact that the government believes they are better equipped to dictate and
lead what to this point is the greatest health care system in the world. Certainly,
there is room for improvement but people all over the world travel to America for
medical care and that must mean we are doing something right.
USPS vs. FedEx and UPS:
The fact that health care is by the passage of this legislation being deemed a
fundamental right. I dont remember seeing that in the Constitution. We continue
on a very slippery slope where everything becomes a right and we move further toward socialism and the nanny state.
Why are we trying to emulate Europe?
Defining full-time for health care purposes as 30+ hours per week
This will force our company to do either 2 things:
Artificially deflate worker hours to keep them underneath the 30 hour threshold
because we cant afford the additional premiums
Hire fewer workers as a result of the increased costs of health care forced on
us
The health insurance tax being levied on insurance companies will be passed on
to consumers and business will bear the biggest brunt of this tax increase.
Again, we add unnecessary financial burdens that make our company less competitive in the global marketplace.
Finally, all of the unknowns that will only be uncovered as we this massive law
takes effect. Once more, I will reference the abortion coverage mandate debacle the
nation has been working through over these last weeks as an example. What other
800 pound gorillas are in the room that we dont yet know about?
To truly help Americans, humbly here are some suggestions to improve access to
affordable health care:
Repeal Obamacare and replace it with sensible improvements to the real issues
of reducing overall cost, increasing choice, and improving access:
Give employers the ability to offer more pre-tax options relative to individuals
tailoring health care needs to their personal situations
Provide for small business pooling for access to reduced costs via more participation
This would give us an opportunity to choose and afford coverage for part-timers
Expand opportunities for flexible spending accounts and Health Savings accounts and the like
Encourage rather than discourage more competition. Right now, it seems like
a company such as ours has very limited options to pursue for health care providers
Thank you for this opportunity to share with you my thoughts on the current
health care situation. Please never forget what makes America great: the freedom
to pursue dreams and become the best we can be by providing equal opportunity,
not equal outcome.
Chairman ROE. Thank you. Thank all of the panel.

The members will start the questioning and just basically start
out by telling you that I think people in this country, individuals
in your business and my business that I ran, know whats best for
our employees. Its like local teachers know whats best, not Washington, D.C., whats going on in the classroom. How arrogant it is
for us to be around the bosses in Washington telling a kindergarten
teacher what they ought to teach.
Healthcare decisions ought to be made between the doctor, the
patient and the patients family, not the insurance company, not
44
the federal government. Thats who ought to be sitting down and
making that decision. Its not right now.
And Mr. Vitt, you made a statement, and I had read your testimony last night, that this allow individuals to select plans that fit
more closely to their financial needs and medical costs. Thats the
problem. If it did that, I would be all for it.
The government decides what I get. A minimal, an essential benefits package will be laid out by a bunch of bureaucrats in Washington, D.C. Theyll decide what I need. Every year since 1977 I sat
down in my practice with an agent just like you, just like you, Mr.
Knecht, and worked out what we could afford that year. I had the
same insurance premiums and same insurance plan that my employees did. We paid a hundred percent, Mr. Nelson, for as many
years as we could, until we could no longer do that. Then we had
to share it, 20 percent sharing with people.
What weve gone through in our business is a consumer-driven
program, health savings account. Thats helped us save about 30
percent of our premiums.
The other thing that can be done Ive seen work extremely well
are wellness programs that reverse the incentives. Ill give you an
example. Holston Munitions is a huge company. Theyre part of a
huge company. They make all thisif it blows up and is C4, they
made it in Kingsport, Tennessee. So they set a program up all of
you in the room should look at.
If you came in and you were an obese diabetic, hypertensive
smoking diabetic, you were a train wreck waiting to happen. They
said fine. You can be a train wreck. Its just going to be an expensive train wreck. They changed those incentives and said if you
have a negative nicotine level, if your Hemoglobin A1c is down,
youre on a weight loss program, your blood pressure is under control, well pay you.
This company with 800 employees has had one minimal insurance increase, premium increase in six years. Theyve been able to
do that by changing the incentives. Right now in this country, our
incentives are wrong. Theyre backwards. Were incentivizing consumption of healthcare, not wellness, and thats what we should be
doing. Im absolutely committed to do it. Ive agreed a hundred percent we need to do this and start over again.
Ms. Kanterman, I want to start with you. You brought up some
great issues about your employees. Also, do you all use temporary
employees in your company, or are they all full time?
Ms. KANTERMAN. We use some temporaries. Right now we have
two temporary employees. But when I said we have 41, those are
the 41 that are on our payroll.
Chairman ROE. So if you grow your business and you hit 50, all
of a sudden youre in a different situation. So would you be
incentivized to stop at 49?
Ms. KANTERMAN. Well, were actually incentivized right now to
drop down to 25 so we can qualify for some of these small business
things. You actually sit down and say maybe we should make two
companies and one company will do this and one company will do
this. Both of them will have less than 25, and we can get some of
these nice incentives theyre doing for small businesses because
were just a little bit over it.
45
Chairman ROE. Well, those incentives stop in 2016. Another
thing, when I look at that, why would you have written a bill
where if someones salary goes up a little bit, the incentive goes
down. If you get more employees, the incentive goes down. So in
2016 all those credits go away. Theyre gone. So youre then stuck.
Ms. KANTERMAN. There goes the carrot and heres the stick.
Chairman ROE. Heres the stick. The stick comes, which as my
colleague knows in a car factory, 36 months, 48 months from now.
Mr. Nelson, do you knowits not clear to me and Ive read the
law, but are you clear what happens to those 400 young people who
Im sure are very glad, as I was, to get a job every summer and
have a little spending money? Its not clear to me the law yet on
whether youre going to have to cover them, whether those 400 who
work in three months equal a hundred FTEs. Do you know the answer to that?
Mr. NELSON. We do not know the answer, and were afraid of
that because were open weekends in May. Then we have June,
July and August. Then were open weekends sometimes in September. So we dont know how were going to followwhat theyre
going to call a part-time worker, how many hours theyre going to
call to do that. People are working older.
Im 78. My grandfather had a farm in Northeast. He worked till
his middle 90s. I hope not to. I hope to retire at 91. I scare the hell
out of my kids. I talk funny now because a vocal cord. One of them
decided to not work anymore. Ive had a pacemaker. Ive had prostate cancer. But I go to work, and I enjoy it. If youre optimistic,
you can keep on working. And I have a lot of older people that
work in our company.
Now, when you have older people, your insurance probably will
go up. But people are healthier when they work.
Chairman ROE. I agree.
Mr. Kelly?
Mr. KELLY. Thank you, Chairman. I think the more I listen to
all of you, the thing I find the most egregious thing of this whole
healthcare bill is its divided us as a nation. It has pitted people
who own companies against people who work for companies, while
most people in the area that I live love where they work and
theyre happy with it. Because when it comes time for fundraising,
these are the people that help get their kids little league uniforms
and buy the Girl Scout cookies and buy the hoagies to help the student bands, do all these different things. So I think theres a very
unique relationship between the people who own businesses and
the associates who work with them.
I have to tell you as I watch this and as I listen to you, the most
egregious thing in all this is government has stepped in between
you and the relationship you have with the people that you work
with. Our business has been around since 1953. So I know what
its like to go through hard times and only made it through with
the Grace of God. Everything else has worked with me.
Ive been to baptisms. Ive been to first communions. Ive been to
birthday parties. Ive been to weddings. Also Ive unfortunately
been to funerals. The relationship that each of us has with the
folks we work with is not some remote employer who doesnt know
who it is whos working with them, not somebody whos sitting in
46
some tower, ivory tower somewhere who doesnt want to provide
benefits to the folks that they work with every day.
And I want to tell you the thing thats most upsetting about all
this is we pitted each one of us against each other. Thats the perception. Theres not a person that Ive ever talked that owns a business that does not want his associates to do well. We know that
their success enables our success. It happens all the time.
Will, when I hear you talk about whats happened to America,
theres no Patient Protection Affordable Care Act in China, those
are the people youre competing with. Their wages are a lot different than your wages. So they can make a product, and I guarantee you its not as good your product.
Ive been on the floor and Ive watched your artisans. I know
what they do. They do incredible things. They take a piece of metal
and make it into something wed love to have and we pass it on
generation after generation.
Mr. Vitt, I bought a lot of insurance. I bought a lot of cars. All
the cars we get I either buy from General Motors or Kia. They
dont give them to me.
So I know when youre talking, Mr. Nelson, and youre talking,
Ms. Kanterman, about long-range planning, because the fact of the
matter is when you go to a lender, a lender will only lend you
money if theyre sure theyre going to get it back, that you have collateral that exceeds whatever it is youre trying to borrow.
Tell me about how difficult it is to come up with long-range
plans, since thats the key here. Were trying to get an economy
started again. I want to tell you the hardest thing for any business
owner, any job creator is to not know what its going to cost them
to bring people in. And that uncertainty is what is killing this
country right now.
This is a bill that absolutely was brought into being the most
horrendous way possible. Providers didnt have an opportunity to
weigh in on it. The actual doctors, nurses, hospitals had no say at
the table. Please. I think this is important because the people that
you work with every day, they know you, they love you, they know
what youre trying to do. Same with you, Mr. Nelson. Same with
you, Will. I walked your places with you and I know what your
folks are like.
Its the inability to plan. And I know about how difficult it is to
make decisions because the folks I talk with are alike. They want
to buy a car when theyre sure they can make those next 36 payments, 48 payments or 60 payments and they actually know what
the price of the car is going to be, not told go ahead and buy, take
delivery of the car, well send you a payment book in three or four
months and well let you know how many years its going to be to
pay it off.
I mean, the planning is the key, whether its your personal business, your personal life, your churches, your schools. Its the ability
to know whats coming that makes the bill for useven for us to
make a decision. How would you begin to plan?
Ms. KANTERMAN. You cant.
Mr. KELLY. You cant.
Ms. KANTERMAN. Not for this particular thing. You just cant.
You just cant make a plan. Were in the same position. We com-
47
pete with ceramic manufacturers all over the world. And we just
cant plan. Lets face it. Anything that the government has taken
over has become more expensive and more fraud possibilities.
Mr. KELLY. Mr. Nelson, you talked about planning. Can you talk
a little bit about it? How would you begin to plan?
Mr. NELSON. First of all, you dont sleep nights. You really have
to plan. You have to know your business. You have to get together.
For example, we have a group of 12 parks scattered through the
United States. Youre only asked to be in it. Theyre the best family
parks. We meet one week a year. We exchange records. We give
ideas to each other and then we encourage. You have to get together and find somebody that knows their business, and theyll
help you.
Then you have to talk to your bank, and you have to meet with
them, and you tell you them the truth. If something happens bad,
go to them first thing. Dont hide it. Theyll appreciate that.
Also, you have to be an optimist. If youre not an optimist, you
shouldnt be in business.
Mr. KELLY. Will, I know that when you talk aboutyoure one
of the few in this country. How do you plan for the future? Mr. Nelson talked about equipment, $7 and a half million. I know about
how easy it is to buy things. Its just paying for them thats the difficult part.
Mr. KNECHT. As we did our strategic planning, our three-year
plan late last year, early this year, one of the biggest question
marks is around this issue, the uncertainty. One of the threats is
the uncertainty and the increased cost that this bill will bring onto
us.
Again, something passed in 2010 that really doesnt take effect
until 2013, 14, 15, thats a bit circumspect, isnt it? If its so great,
why do you wait? Then I remember then Speaker Pelosis comments when she said Weve got to pass it so we can read it. Logically as a citizen thats appalling. Whether she was a Republican
or Democrat, thats appalling.
Again, this is the environment that Washington is putting their
job creators in. Weve added 30, almost 40 employees in two years.
We see this as a huge threat for us. Can we continue to act? Do
we need to scale back our plans? Do we need to cut peoples hours
so we can compete with China and Mexico? We want to give more.
We want to stay in business the next 90 years. So planning is
how do you do it when you dont know.
Mr. KELLY. Well, you cant. Im not sure everyone knows what
happened. What year did your business burn to the ground?
Mr. KNECHT. We burned to the ground almost two years ago. We
had about 70 employees at that time, and providentiallyI give all
the credit to the Lordwe have almost 120 today and were growing.
Again, thats a testament to the other 119 people. You all met
me today. You know its not me. The 119 people that I work with
are amazing. Its a testament to their stick-to-it-ness that were
even here today and to the great people of this area who supported
us.
48
But long-term planning, its a crap shoot for us right now because we dont know all thats coming down. 2,500 pages, how
could you know?
Mr. KELLY. I know theres more to the story. I know that you and
your associates watched it as it burned. You made a commitment
to your folks that night that we will rebuild. Its like the Phoenix
rising from the ashes. It will rise again. We will work again. We
will produce great products again. And thats the story of America.
Thats what I think is the underlying issue here today.
If we really want to grow the economy, if we really want to get
Americans to work, if we really want to see this nation accomplish
great things, and theres only one thing standing in the way right
now. Its government. [Applause.]
Mr. KELLY. Thank you all for being here today. This is again an
exercise in what makes this country so great. We can meet in open.
We can disagree. We have people come in and say exactly the opposite of us. And we welcome that. So thank you so much.
I want to thank my colleague, Dr. Roe. This is a great pleasure.
And it is truly an honor and a privilege serve you. Listen, we
work for you. Everything that we spend comes out of your pockets.
Were not benevolent monarchs that are coming here to shower our
wealth on you. You provide every single penny. You and your
grandchildren and your children have cosigned, by the way, the
debt thats facing us right now. Weve got to get through this as
Americans. This is not a Republican or Democratic or Libertarian
or Independent issue. This is an American issue. Weve got to accomplish this, and weve got to conquer it together. So thank you
so much.
And, Doctor, thank you.
Chairman ROE. Thanks, Mr. Kelly. Im going to finish up today
by just telling you a couple of stories we heard by a panel, very
quickly, in Evansville, Indiana. One was an Ihop owner in the restaurant business that had 800 employees and I think 12 or 14
Ihops. Apparently in the restaurant business, if you can earn about
$3,000 per employee, thats pretty good if you earn that much
money per employee. He said: Doc, what am I going to do if I have
more than 50 employees. If I get what the government forces me
to buy, its going to cost me $7,000 per employee. If I then pay the
penalty, which is not tax deductible, I take all my profit. I make
no money. He said, What do I do?
I said, Well, Ill tell you what Washington thinks. You can
charge me $10 for a pancake I wont go buy and youll go out of
business. Thats what will happen to you.
A second man was Mr. Graber, had an eighth grade education.
He started in the 70s building pole barns in southern Indiana with
three Amish guys. Now he has 210 employees, spends over a million dollars a year providing insurance for his employees. He said,
Doc, Im thinking this may put me under. I may not be able to
survive this.
Mr. Knecht, youre wrong. Its 10,000 pages in writing. The rules
by the government is 2,500-some pages. Its unbelievable.
I will say, Ms. Koehler, earlier I read your testimony last week.
It disturbed me as a physician greatly when I read it. I got up
early this morning and called my hospital administrator in Ten-
49
nessee. I called my best friend in the world, Dr. Tom Eades. Hes
a cardiologist in San Antonio, Texas. I called Dr. Jerry Brapple
whos in the Fordingham Cardiology Group in Kingsport, Tennessee. I talked with the local hospital administrator there.
I dont know what kind of person or doctor you that talked with.
If that happened in any of these placesyou just fix it and you
worry about how to pay it later. I was appalled by that, and whatever that persons motivation is, I apologize for it, because that
should never happen and does not happen. I talked to these folks
at least in those four locations. I got up early this morning. I woke
my friend up in Texas I was so upset.
Something I want to share with you all. This was in one of the
committee hearings a year ago. Any businesses, Ill make sure the
staff gets it to you. Its from the Lawton Group, which is the largest HR group. They went in and looked through this entire law to
see how it would affect businesses from small to large. Youre welcome to it.
Secondly, you know that my website will get for you if you want
to know the details of this bill. I have downloaded it. Its sort of
a Cliff Notes version, four pages. You can see when it comes about.
If you like that, well get that to you. Well be glad to do that.
Ms. Kit, you mentioned about losingmy dad lost his job when
I was in the Army in Korea near the DMZ in 1973. So I know what
it is to have your job go overseas, manufacturing job that my dad
lived with after World War II. At 50 years old, high school education, no job. So I understand that.
I want to thank you this group. You all have been fantastic. Its
been great being in Butler. Its very much like my home. And as
Congressman Kelly said, we work for you all. Were here trying.
We just have a different idea. I believe individuals and families
and small businesses make those decisions. I know I worked with
that my entire life. Certainly there is a role for government. I was
the mayor of Johnson City. I feel really comfortable here. It reminds me of being back in city hall.
But the best government youll have will be local government
right here where you are in Butler, Pennsylvania. You have more
access to it. The farther it gets away, the worse it is. Im going to
tell you right now I dont want any of you sending another nickel
of your hard earned tax dollars to Washington, D.C. and see the
waste that I see up there. It is frustrating when I was the mayor,
when I was a small businessperson, to see the waste and to see
this bill that was written with all the good intentions in the world,
no question about that.
Because I believe we have the resources that were currently
spending to provide care for all of our citizens. I believe we can do
that. I feel an obligation to see that happen, and I think we can
do that. This is a great country. This proves it right here, that we
have an open meeting today where youve come and you can hear
and see your government working.
I thank Mike, I want to thank you for serving. I think this area
is very well represented with Mike Kelly. Thats been true. [Applause.]
Mr. KELLY. Thank you.
50
Chairman ROE. Were just a couple of guys that were out in the
real world until three years ago. We were not inside the Beltway
where Washington is bad. Were out here in the real world. Again,
both panels, for all of you, I commend your time preparing this testimony. I read every word of it. We will take it back, and well use
these comments that we have to help work legislation. Do you have
any further comments?
Without any further comments, we are adjourned. Thank you for
being here.
[Whereupon, at 2:54 p.m., the subcommittee was adjourned.]

House Hearing, 112TH Congress - Health Care: Challenges Facing Pennsylvania's Workers and Job Creators

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House Hearing, 112TH Congress - Health Care: Challenges Facing Pennsylvania's Workers and Job Creators

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HEALTH CARE: CHALLENGES FACING

PENNSYLVANIAS WORKERS AND JOB CREATORS

ONE HUNDRED TWELFTH CONGRESS

HEARING HELD IN BUTLER, PA, FEBRUARY 22, 2012

Serial No. 11253

For sale by the Superintendent of Documents, U.S. Government Printing Office

COMMITTEE ON EDUCATION AND THE WORKFORCE

George Miller, California,

Barrett Karr, Staff Director

SUBCOMMITTEE ON HEALTH, EMPLOYMENT, LABOR AND PENSIONS

Robert E. Andrews, New Jersey

Hearing held on February 22, 2012 .......................................................................

HEALTH CARE: CHALLENGES

The subcommittee met, pursuant to call, at 1:00 p.m., Butler

Mr. KELLY. Thank you, Doctor. I appreciate that. Todays hearing

Chairman ROE. Thank you, Senator White. Your comments and

Ms. BISHOP. Congressman Kelly, Congressman Roe, thank you

Chairman ROE. Thank you, Ms. Bishop.

Chairman ROE. Thank you very much for your testimony.

Ms. JOINT. Good afternoon. My name is Lori Joint, and Im the

Ms. KANTERMAN. Thank you, Mike, for inviting us here today,

Chairman ROE. Thank you, Ms. Kanterman.

Chairman ROE. Thank you, Mr. Nelson.

Chairman ROE. Thank you for staying on time.

Chairman ROE. Thank you. Thank all of the panel.

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